Change needs to be shaped by the needs of those outside rather than inside financeby Andrew Haldane / September 17, 2015 / Leave a comment
First, a disclaimer—I think John Kay is a quite brilliant economist, thinker and writer. As these three attributes are not always complementary, he is the rarest of breeds. That means I am probably incapable of writing a genuinely critical review of a John Kay book.
Fortunately, in this case there is no need to do so. His new book, Other People’s Money, is about as good a demonstration of Kay’s skills (as economist, thinker and writer) as you are likely to find. Where others have jumped in feet-first, Kay provides a head-first diagnosis of what contribution finance makes to wider society.
The core of Kay’s argument is simply put. Finance plays a crucial role in supporting the economy and wider society, along at least four dimensions: in facilitating payments between people, in matching end-borrowers and end-investors, in managing risks to one’s health and wealth and in managing money across generations. And historically at least, these are precisely the roles the financial sector has played. That is why, through the ages, it has been accepted (if not always especially liked) as a trusted servant of society.
But the past few decades have seen a sea-change in the functioning, and hence perception, of the financial sector. Latterly, that sea-change has at times risked flooding the entire economic and soci…