Diener nicht herr
What’s the problem?
Have you heard of “the masters of the universe”? In the bubble years before the financial crisis that’s what they called the most powerful men (and a few women) and firms on Wall Street, in the City of London and in Frankfurt – they were so powerful that governments took their phone-calls and generally did what they wanted. You might think that the financial crisis that erupted in 2008 would have ended that. But for the last couple of years we’ve been seeing headlines like “Wall Street’s Masters of the Universe are back” and “The New masters of the Universe”.
What’s so bad about that?
What difference does it make to me if a few bankers and fund managers make a bit of money, you might ask? The problem is that finance is a powerful tool: in today’s economy it gives direction to our economies and societies and it can expose us to dangers and crises – like the crisis of 2008 that continues to cost us dear. The thing is, what is good for the profits of the largest financial firms (and for the staggering bonuses they pay themselves) is not necessarily good for society more generally – especially one in the middle of an environmental catastrophe that threatens human existence together with great and growing inequality and the traumatic social, emotional and health problems that these twin crises produce.
In the right circumstances, finance can serve society, helping us set out on the transition to a low carbon, climate friendly, socially just future. But ten years on from the crisis it is clear that the current financial system is not serving people and planet, is not democratically governed and is unstable. Letting financial firms freely pursue their short-term profits has led to a system dominated by too-big-to-fail firms, more interested in speculation amongst themselves than in long term investing and in good financial products, meaning our society is financialised and drowning in private debt. We need banks, financial firms, financial markets and their regulators to be more accountable to society, we need to set limits on some of their actions and we need to steer them towards funding an environmental transition.
What’s the alternative?
The alternative is that we exert democratic control over and influence on the way the financial system develops – finance should not have free rein. We can demote the so-called masters of the universe and make finance answerable, at the service of society more generally. We can use finance to make the changes necessary for us all to be able to live a decent and meaningful life.
How will it help?
Finance can help kick start the transition to a new economy and society – one that sees us living within planetary limits and fixing the multitude of global and social problems we face. Democratic processes must be put in place to guide the financial sector’s development, especially its structures, limits and incentives, so that our savings, our pensions, our insurance premiums and finance generally are directed to transitioning towards a new economy and society.