Values, Markets, and the State: Building a Sustainable and Accountable Future

The discussion, featuring Mark Carney and William Janeway, explores the intricate relationship between market value and societal values, particularly in the context of global challenges like climate change. Carney's book "Value Values" serves as a central point, advocating for a shift from a trade-off between profit and planet to a synergistic approach where markets serve social objectives like sustainability. Janeway complements this by highlighting the often-overlooked role of the state in fostering innovation and addressing market failures, drawing parallels from historical technological revolutions and emphasizing the need for public-private collaboration.

A key distinction is made between "flattened values" and "hierarchical values," with the latter being crucial for aligning market mechanisms with overarching societal goals like achieving net-zero emissions. Janeway introduces the concept of "efficiency" as the traditional virtue of economics versus "fairness" as the virtue of politics, arguing that efficiency can sometimes be the enemy of innovation and that questions of distribution are often ignored by economists. The speakers also differentiate between productive speculation that funds technological advancement (e.g., railroads, electrification, dot-com bubble) and destructive speculation that leads to financial crises without real economic benefit.

Carney outlines a three-pronged approach for achieving sustainability: political technology (social movements, legislative objectives like net-zero), financial technology (transparency, information, market plans for net-zero), and engineering technologies (renewables, carbon capture). He emphasizes the importance of asking financial institutions and businesses for their net-zero plans. Janeway stresses the state's role as a funder of R&D and a "first customer" to de-risk frontier technologies. Both implicitly advocate for stronger institutional frameworks and accountability mechanisms to prevent financial excesses and ensure market integrity, including measures like clawback bonuses and clearer managerial responsibilities.

The conversation extends to the broader implications of financial market accountability, particularly in the wake of the 2008 global financial crisis. Janeway critiques the perceived failure to prosecute individuals and institutions, citing historical precedents like the S&L crisis. Carney acknowledges this failure but points to subsequent reforms in the UK as steps towards reinforcing both formal and "soft" institutional norms. The discussion ultimately underscores the need for a re-evaluation of value theory in economics to adapt to the digital and sustainable revolutions, ensuring that market forces are harnessed for collective well-being rather than solely for profit.

"Our planet is burning and we central bankers could look down on our men and pretend it is for others to act and that we should simply be followers if we did we would be failing on our mandate and we would be missing in action."

"how do we use the market to achieve social goals and what are the necessary circumstances for that to happen"

"how can we move out of a situation which is the natural resting point for economists and financiers of a trade-off between short-term and long-term or in the case of the environment between planet and profit how do we move to a situation as I believe we are beginning to do a situation where the social objective which is sustainability to address climate change to stop the planet from burning to quote Christine Lagarde and use the market as part of that solution"

"what is your plan are you onside with this move to net zero or are you sitting this one out do you think you are to use English are you a part of society or are you apart from society"

"trust but verify"

"it's that questions of distribution are questions of value that are beyond economics scope that economics is concerned only with efficiency and after things that hobble market efficiency are taken away then all the economists can say is quote the market giveth the market take it away blessed be the name of the market"

"if efficiency is the virtue of economics fairness perceived fairness is the virtue of politics"

"speculators may do no harm as bubbles on a steady stream of enterprise but the position is serious when enterprise becomes the bubble on a whirlpool of speculation"

"if it doesn't make sense in finance it doesn't make sense"

"values are not self-reinforcing that values that values are embedded in institutional sanctions"