Mark Carney says post-pandemic 'bump' not enough for smooth recovery

In his BBC Reith Lectures, Mark Carney argues that the world's ability to deal with crises is hampered by a fundamental shift in our relationship to finance and economics. The economist says the question of what is valuable has been twisted by our sense of what is profitable.

From credit to climate to COVID: Former bank governor warns of crisis in values

The former governor of the Bank of Canada Mark Carney argues the world’s ability to deal with crises such as COVID, credit and climate change is hampered by a fundamental shift in our relationship to finance and economics. He says our view on what is valuable has been twisted by our sense of what is profitable. (Chris J Ratcliffe/Pool Photo via AP)

*Originally aired on February 21, 2021.

It's tempting to imagine economic recovery will quickly follow once COVID lockdowns are over but Mark Carney advises some caution to optimists.

Carney, 55, has built something of a niche dispensing advice in times of economic crisis: he was the governor of the Bank of Canada in 2008 as the world navigated the worst financial meltdown in decades, and in 2011 while the world navigated the Euro crisis. He was most recently the governor of the Bank of England as the country hurtled toward Brexit, when he stood accused of unleashing "project hysteria" for stepping into the limelight to warn of the economic consequences of leaving the EU.

Since his own exit from Europe last year, Carney is zeroing in on the climate change crisis, and what he calls a crisis of values: one he says has put market values before human values.

Values by Mark Carney is available in Canada on March 16, 2021. (Signal)

In an era when anti-globalist and anti-expert sentiment is on the rise, due in large part to the failures of financial markets, Carney, also a former Goldman Sachs investment banker, acknowledges some may not see him as the best messenger for more inclusive and fairer capitalism. 

But he profoundly disagrees.

"I have a perspective on this. I've taken actions, including on climate, and the Euro crisis, and others to help yield a more inclusive system and a better system for all," Carney said in an interview on the occasion of the broadcast of his BBC Reith Lectures on CBC Radio's IDEAS. 

"We'll have to have a debate about whether I see things properly, but it's based on more than a passing familiarity with what happened."

In his BBC Reith Lectures, delivered in December, and in a book to be released in mid-March — Carney argues that the world's ability to deal with crises is hampered by a fundamental shift in our relationship to finance and economics. He says the question of what is valuable, has been twisted by our sense of what is profitable, or in his words, "societies' values became equated with financial value." 

"The market is becoming the organising framework, not only for economies, but also increasingly for broader human relations with its reach extending well into civic and family life," he said.

"In parallel, the social constraints on unbridled capitalism, religion and the tacit social contract have been steadily eased." 

COVID-19 recovery prospects

In his lectures, Carney has also turned his attention to the COVID crisis, and is informally advising Prime Minister Justin Trudeau on navigating the post-pandemic recovery.

Every country, he argues, will experience a bump in growth as we come out of the more extreme lockdowns.

"That's the easy bit. No one should be doing any victory laps for that first quarter," he said.

"The question is, what's the follow through on that? And that's where stimulus is going to be particularly important."

Mark Carney is the UN Special Envoy on Climate. He argues there is no tradeoff between the economy and sustainability. What needs to change is to undo the shift from a market economy, to a market society — and to examine how we define 'value.' (Tolga Akmen/AFP via Getty Images)

Carney says his own view is that fighting climate change and working toward net zero emissions is the best stimulus project to rev up the country's economy post COVID-19.

Carney is currently the UN Special Envoy on Climate and Finance and provides advice on the same topic to the UK prime minister. 

Another key question in the post-COVID recovery, he says: is what happens to social capital? "Are we rebuilding [it], or do we come out of this having further drawn down our social capital?"

It partly depends on whether the recovery benefits everyone after a crisis that has disproportionately affected groups already economically disadvantaged.

With Carney's move to Ottawa — his new book, and the launch of a Twitter account, rumours still swirl about a potential jump into politics. 

He dismissed the possibility.

"There are many ways to serve," he said. 

* This episode was produced by Matthew Lazin-Ryder.

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