A Review of Hazel Henderson’s ‘Global Finance Lost in Cyberspace’

Ethical Markets Reforming Global Finance, Ethical Markets Review

By Leland Lehrman, Partner, Fund Balance

Hazel Henderson’s essay “Global Finance Lost in Cyberspace” is a fabulously original synthesis of the latest and greatest in ecological economics and systems theory.

There are important areas for follow up. I wish Henderson had provided links so that we could follow up on Haldane’s ecological financial systems analysis, Kahneman’s emotional economics, or the Swiss study on corporate wealth concentration, guided by Henderson’s hand.

I’ve taken the opportunity here to introduce Kalle Lasn and David Orrell.

Kalle is the editor of Adbusters Magazine, and a founder in the “Western Hemisphere” of the current Occupy movement, a bearer of the torch lit by King, Gandhi, Dickens, and on back through the mists of time. Kalle’s recent  editorial for the Washington Post has some good positions in it worth quoting:

And we will see clearly articulated demands emerging, among them a “Robin Hood tax” on all financial transactions and currency trades; a ban on high-frequency “flash” trading; the reinstatement of the Glass-Steagall Act to again separate investment banking from commercial banking; a constitutional amendment to revoke corporate personhood and overrule Citizens United ; a move toward a “true cost” market regime in which the price of every product reflects the ecological cost of its production, distribution and use; and with a bit of luck, perhaps even the birth of a new, left-right hybrid political party that moves America beyond the Coke vs. Pepsi choices of the past.

Although the financial transactions tax is still a sticking point for the UK and US, the EU appears to be moving towards it, led by both Germany and France.

In an era of 3-20% taxes on non-discretionary land, food, clothing, healthcare and shelter (building materials), the idea that a fraction of a decimal point tax on discretionary financial transactions is impolitic or unbusinesslike, rather than a reasonable response to short termism feels awkward. It may seem paradoxical to some, but countries which implement the FTT are likely to find that business, confidence and most importantly quality of life increase rather than decrease.

Does Scandinavia rate highly on quality of life indices because of its unregulated financial markets?

An infrastructure and culture of fairness and social conscience is as attractive to productive, cultured citizens as the hypercompetitive world of deregulated markets is to traders and financial professionals. Given the largest investment club at Harvard is now social entrepreneurship, the likelihood of this trend growing is high.

Furthermore, the necessary rise of women in politics and business will continue, as it must. The importance of The Observer’s article: “Testosterone and high finance do not mix: so bring on the women” cannot be overstated, and the work of former Goldman Sachs trader John Coates as profiled in that article is essential to understanding what is wrong with an economy run predominantly from the trading desk. Women are likely to appreciate the value of a financial transactions tax, given that they are all too familiar with the taxes on the staples and non-discretionary items fundamental to the life and health of their families. Here is a quote from Coates’ partner in the scientific study that forms the basis of the article:

What is clear is that there are neurological differences between the sexes. Women, in very general terms, are less competitive, and less concerned with the status of being successful. If you want to make women more present, you have to remember two things: the world they are coming into is a man-made world. The financial world. So, either they become surrogate men… or you change the world.

I’m for changing the world.

John Fullerton and his team in the US put together a terrific Senate Committee Presentation on the FTT in which it was likened to the governor on a steam engine, something which is described in detail in David Orrell’s book, Economyths. It strikes me that an FTT is similar in effect to an interest rate, and could even flex up and down like interest rates depending on whether or not the markets are overheating or becoming excessively short term focused.

Additional intelligent policy choices appear regularly in Adbusters, on the website of the  New York General Assembly, in the chat channel of the livestream Occupy coverage and in supportive editorials around the world.

At the recent UNEP FI conference, there was both angst about and appreciation for the Occupy Movement. I was pleased to see former PM Gordon Brown refer to it favorably in his speech, although I am concerned that he is not aware of the refined intellectual and policy positions of The Occupation, and was perhaps too willing to dismiss its ability to design and lovingly manage a modern financial system and civilization.

I had the opportunity to speak with Wolfgang Engshuber at the dinner in DC, and at his request, promised him I would arrange for him to speak with some of the intellectual architects of Occupy Wall Street such that an informal channel could be established between the world of ESG investment and the future leaders of the world, a productive effort I’m sure. Gavin Power, at the UN Global Compact was also very kind, and I hope to include him in the conversation.

David Orrell is the author of  “Economyths, 10 Ways Economics Gets It Wrong“, a brilliant reconstruction of economics that covers gender, happiness, fairness and other perspectives on economics in intellectually and mathematically rigorous ways without becoming unreadable.

David’s famous concluding remarks in Economyths were recently published in Adbusters. They are worth requoting here:

So, students. Decision time. You live at what many believe is a bifurcation point in human history. You’ve seen all the graphs with lines curving up like a ski jump. Human population. Gross domestic product. Species extinction. Carbon emissions. Inequality. Resource shortages. You know that something has to give. You’ve got an idea that the price isn’t right. Maybe you’re even suspicious that if the world economy does turn out to be a Ponzi scheme, you or your children are a little bit late to the game.

You therefore stand at a fork in the road. You can take the orthodox route — and risk ending up with a qualification as impressive as a degree in Marxist ideology right after the fall of the Berlin Wall. Or you can take a change on regime shift by speaking up, questioning your teachers, being open to disruptive ideas, and generally acting as an agent of change. You can insist that the economy is a complex, dynamic, networked system — and demand the tools to understand it. You can point out that the economy is unfair, unstable, and unsustainable — and demand the skills to heal it. You can tell the oracles that they have failed. You can go in and break the machine. And then you can do something new.

As with North/South, East/West, Left/Right (Brain), Masculine/Feminine, Mental/Emotional, it appears Balance is the crucial concept, word and story moving forward, the kind of loving balance that biology favors, the evolving symmetry expressed in the golden mean, which UNEP FI so appropriately uses as the title of its monthly newsletter, 0.618.

 

Leland Lehrman
Partner,  Fund Balance