Last week’s announcement of reform in the financial sector, and the Budget this week, are both major steps in the government response to the financial crisis.The risk with both, however, is that we rush into the technical detail and fail to stand back to address the underlying ethical factors. It is vital that we do so, lest the remedy fails in either case truly to serve the common good.
It is now widely acknowledged that underlying the banking crisis was the gradual erosion of the duty of service to society.
A market mentality which focused relentlessly on the search for ever greater and quicker profits, exploiting to the full the regulatory opportunities available, allowed many to lend and deal recklessly.
In doing so, they connived of course with the eager willingness of so many to borrow beyond their means.
New regulatory structures of themselves will not solve the underlying problem, which is about the purpose of banks and financial institutions: in the end, are they there just to make money, or to serve society?
A key part of the change needed is to forge a cultural consensus in the financial sector that its licence to operate depends on a clear and demonstrable commitment to service. Of course, profits have to be made if an efficient and thriving financial sector is in fact to serve society.
But the ethical judgment, which has to be transmitted right through the organisations concerned, is that profit must only be a means to this end, and not an end in itself. We have a long way to go to achieve this.
A key job here rests with the leaders of banks and other institutions. In a far-reaching document presenting the social teaching of the Church last year, Pope Benedict emphasised that “development is impossible without upright men and women, without financiers and politicians whose consciences are finely attuned to the common good”.
If the long-term recovery of the financial sector depends on ethical leadership, so too more generally does the health of the economy. What are the ethical considerations when it comes to determining an austerity Budget? One of course is justice. We live in a society of continuing and wide inequality, as the National Equality Panel report earlier this year demonstrated.
The report noted: “How the public finances are rebalanced will probably be the most important influence on how economic inequalities evolve: will the costs of recovery be borne by those who gained least before the crisis, or by those in the strongest position to do so?” The outcome needs to be fair and seen to be fair. There also needs to be clarity of process so that we understand and are as involved as possible in a process that will affect us all.
A great deal of the support which any government needs in such difficult circumstances will depend on the extent to which it is seen to be acting impartially and prudently, with a demonstrable care for basic human needs and a continuing sense of our responsibility in the wider world.
A powerfully positive message will be sent if in Tuesday’s Budget the overseas aid programme to assist the development of the world’s poorest people is not cut.
Over the past 15 years, we have seen an extraordinary period of economic growth and prosperity. Paradoxically, it has been accompanied by serious human costs in increasing rates of relationship breakdown, loneliness and reduced levels of happiness and contentment. So how do we truly measure the state of our nation?
The relentless focus on GDP and other measures of economic activity fails to take any account of many core human activities, especially within families, which in fact lie at the heart of human wellbeing.
The times we are entering are difficult and will be painful. Joblessness is a grave social ill, and every effort must be made to try to bring about a sustainable recovery.
At the same time, we should, as a society, explore profoundly what it is that truly makes for a humane and fulfilled life. This is also an opportunity to change our lifestyle for the better, giving more value to the intangible: qualities and virtues such as love and compassion that never appear on records of GDP, but which are at the heart of all that makes life worthwhile.
The Most Rev Vincent Nichols is Archbishop of Westminster