A Financial Times Book of the Year
Can one be both an ethical person and an effective businessperson? As an ordained priest and former bank chairman, Stephen Green thinks so.
In Good Value, Green retraces the history of the global economy and its financial systems, and shows that while the marketplace has delivered huge advantages to humanity, it has also abandoned over a billion people to extreme poverty, encouraged overconsumption and debt, and ravaged the environment.
How do we reconcile the demands of capitalism with both the common good and our own spiritual and psychological needs as individuals? To answer that, and some of the most vexing questions of our age, Green takes us on a lively and erudite journey through history, looking for lessons in the work of economists and philosophers, businessmen and poets, theologians and novelists, playwrights and political scientists. An essential business book by a man who is uniquely qualified to write it, Good Value is a timely and persuasive analysis of the most pressing financial and moral questions we face.
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In My Beginning Is My End
We shall not cease from exploration And the end of all our exploring Will be to arrive where we started And know the place for the first time.
T. S. Eliot — "Little Gidding" (1942)
Lake Como. Spring 2008. April. Eliot's cruellest month. Twilight falling. From the shore, the lights of Brunate in the distance are just beginning to flicker into life. Shadows lengthen in the gardens of the Villa d'Este.
Everywhere the soothing influence of the pleasure principle is clearly in evidence. Despite all the beauties that nature provides in Lombardy without any human intervention, there is very little here that has escaped the improving hands of painters, architects, gardeners and sculptors.
With names that sound like expensive puddings, luxurious retreats line the shores — Villa Carlotta, Villa del Balbianello, Villa Melzi, Villa Serbelloni. The lake has entranced the cream of European aristocratic and cultural circles for two millennia, from Pliny to George IV to Stendhal and Liszt. The Villa d'Este at Cernobbio, commissioned in the sixteenth century by Cardinal Tolomeo Galli, is now a luxury hotel. Under vaulted ceilings, past statues of sleeping nymphs and over gravelled paths, the guests come and go. If the story of humankind is how far we have come from the freezing cave and the daily chase, then here at least it is easy to forget that either ever existed.
Why am I here? Another seminar on commerce and finance: another of those Davos-like gatherings that bring together the usual suspects — politicians, financiers and economists — to discuss the state of the world. Champagne and discretion. The rainmakers of global capitalism can wander among the azaleas, camellias, oleanders, rhododendrons, hydrangeas, roses and jasmine bushes, and confide their fears and hopes to each other. It is a time of retreat, and a time to share. A place to relax, to take stock, perhaps to plan, perhaps to deal.
This year, more so than anyone can remember, the mood is bleak. The rumble of approaching economic thunder is the basso continuo of all discussions. Over ten years of growth and untrammelled consumer expansion may be coming to an end.
Nobody should be surprised. All over the world the economic news has been foreboding.
A new double-barrelled word has entered the conversation, spreading fear like a sort of plague. This word is "subprime." Two years ago, most members of the public had never heard of it. At the Villa d'Este it is on everyone's lips. Already several hundred billion dollars have been written off by financial institutions as a result of mortgage-payment defaults and huge write-downs of mortgage-backed asset values. The figure is to get much larger. US banks have just reported the worst quarterly performance since 1990. Banks in the US, the UK and Germany have had to be rescued from collapse and have lost their independence. And much more is to come.
The scale of the unfolding crisis is alarming. The International Monetary Fund has delivered one of its gloomiest forecasts ever. It says bluntly that the troubles that erupted into the open in August 2007 now look like they are developing into the largest financial shock to the system for decades. It predicts that the liquidity squeeze will lead to a full-blown credit crunch in the advanced economies. It predicts recession in the US later in the year, and only slow recovery thereafter. It says that weakening growth in advanced economies will have knock-on effects on the large emerging economies, particularly in Asia and Latin America. It concludes that the heady growth rates that the world has come to take for granted are — at least for the time being — a thing of the past.
Worrying, too, is the parlous state of consumer confidence. There is wide agreement that the housing sector is in serious decline in several advanced economies. After many years of rapid price increases, with all the confident investment and spending that result, real investment in housing is now falling in countries as diverse as the United States, Britain, Australia, Spain and Ireland. The US Commerce Department has just released figures showing that the number of new houses remaining unsold in the US is now at its highest level in a quarter of a century.
At the same time there are increasing fears of inflation, for the price of oil is soaring. Consumption is forecast to increase relentlessly by 1.2 million barrels a day this year, to a new record of 87.2 million barrels a day. Prices are at record levels — flirting with $120 a barrel — and yet supply is not rising. In the US, experts are predicting a rise to over $4 a gallon at the gasoline pump by the end of the summer and, according to one, $7 a gallon in the next four years. More worrying still is the apparent paralysis of supply in the non-OPEC countries, such as Russia, Norway and Mexico. Strikes by oil workers in Nigeria have shut down around 1.7 percent of the world's production. How will all this end?
And there is an even worse spectre abroad: food prices. The United Nations Food Agency is warning that, across the world, escalating food prices threaten to force 100 million people to go hungry. Analysts are predicting that the days of relatively cheap food are over. Rice prices have already nearly tripled in a year. Wheat and vegetable oil are due to continue their steady rise. In poor countries there are food riots. More are predicted. Even in rich countries the effects are noticeable. In Britain, the Times devotes an entire front page to the report that food price inflation has pushed up the average weekly UK shopping bill by 15 percent in a year — not life-threatening, but quite enough to sour the mood of any electorate.
In this mountainous corner of European civilization, this showcase of some of humanity's finest artifacts, we are feeling the first tremors of an economic earthquake. No one is going so far as to say that the walls of the citadel will come tumbling down. However, no one is going to guarantee its perpetual stability with quite as much confidence as they might have done just a year earlier.
And it is not only the actors of the financial world who are affected. Shocks to the global financial system will eventually affect us all, from suburban families in America to small businesses in China, to Greek shipowners and to Russian oligarchs.
Somewhere deep down, the question gnaws away: If, with all the technology and sophistication at our disposal, the basic structure of the world economy is built upon sand, not rock, then what is the justification for all our labours? For all of us who work directly or tangentially in the financial system, how can everything we relied on be so swiftly under threat?
Milan. The world capital of pizzazz. The Piazza del Duomo. The same spring 2008. The same April. Midday. All the life of the city seems to gather here, along with many of Lombardy's pigeons. Palatial nineteenth-century buildings flank two sides of the spacious square. Giuseppe Mengoni's soaring 30-metre high shopping arcade, the Galleria Vittorio Emanuele, a cathedral of commerce that has become home to Gucci, Prada, Louis Vuitton and other minor divinities popular in Italy, emerges on to the square through a triumphal archway. In the midst of the piazza is a statue on horseback of Vittorio himself, Italy's boisterous first king. Underground, though, are the foundations of the fourth-century Basilica di Santa Tecla, where St. Augustine had been baptized sixteen hundred years before. And then, drawing all eyes and dominating the space as powerfully as if it were a vision of paradise, the breathtaking architectural masterpiece of Milan's duomo, an extraordinary tracery of stone and glass rising majestically through the spring sunshine.
Good journalist that he was, Mark Twain noted his first impression: "What a wonder it is! So grand, so solemn, so vast! And yet so delicate, so airy, so graceful! A very world of solid weight, and yet it seems ... a delusion of frostwork that might vanish with a breath."
I have left the Villa d'Este a few hours early to pay homage to one of the largest and most beautiful churches in the world. Immediately the contrast strikes deep. I have come from a place of luxury and calm, albeit threatened and undermined by the distant drumbeat of impending economic instability. And I have arrived in the heart of a modern Italian city, nearly 4 million people living amid a tangle of medieval streets, nineteenth-century confidence and twentieth-century functionalism, vibrant, volatile and vivid, the very embodiment of energetic instability, yet where the main symbol is a building of such ethereal transcendence that it makes the present economic and financial disturbances seem like nothing more significant than duck down floating on the tide of history.
All the more remarkable, then, to ponder the conditions out of which this monument arose. Few would dispute that the latter decades of the fourteenth century were some of the darkest, most unstable years in Europe's history. When the then archbishop of Milan, Antonio da Saluzzo, began work on the duomo in 1386, Europe was going through one of its most dangerous phases. The Little Ice Age and, even more dramatically, the bubonic plague had laid waste to the intellectual and agricultural progress of thirteenth-century Europe, spreading starvation, disease and despair throughout the continent. In the countryside, marauding and desperate gangs searched frantically for food and shelter.
During the middle years of the fourteenth century the Black Death spread rapidly through France, Spain and Italy, and then crossed the channel into England. In some areas mortality was as high as 90 percent. The first wave of plague swept through Europe between 1347 and 1350, and in the next fifty years there were six further waves. By 1400 most estimates agree that the population of Europe had probably been cut by at least a third. Life has rarely fitted Hobbes's famous description so closely: "solitary, poor, nasty, brutish, and short."
Alongside this boiled other troubles. The Hundred Years War plunged much of France into turmoil until 1453; the only cohesive social force in the continent, the Roman Catholic Church, was seething with corruption; there were rival popes in Rome and Avignon; anti-Semitism was rife; and there were regular hysterical outbursts of violent witch-hunting in order to try to root out the supposed causes of all this distress. To imagine a building project such as Milan Cathedral being launched against a backcloth of such turbulence is extraordinary to say the least.
Nor was it just the beginnings of the project that were battered by the storms of history. Officially the cathedral was not completed until 1965. In the intervening 579 years since the first stone was laid, embellishment and renovation continued through upheavals and cataclysms as powerful as any in the world. The very conditions that made Milan prosper — its strategic significance in one of Europe's richest and most fertile regions, its geographical position at the head of Italy near the gateway through the Alps, and its rapidly increasing artistic treasure trove — made it the object of many an aggressor's attentions. And yet, as invaders battled on the Lombardy plains and new rulers passed through the royal and religious palaces, the cathedral endured.
Not that this was a straightforward case of the spiritual world triumphant amid the storms of human history. This building was always the result of mixed motives, with the human yearning for God and for Mammon (and the human lust for power) in the tight and tangled embrace that we have always known. Yes, the cathedral was built to the glory of God and for the edification of the faithful. But it was also built to establish the political dominance of Milan and its ruling families over the surrounding dynasties.
In Milan's endless struggle with the neighbouring cities of Bergamo, Novara, Cremona, Como and Lodi, the cathedral became an increasingly important symbol. Milan's regional hegemony was in the end undefeated, but then broader European struggles enveloped the city. In the early sixteenth century northern Italy became a battleground between the Spanish and French. In 1535 Lombardy became a Spanish colony, and for 170 years Milan became the neglected capital of a distant provincial outpost.
In the early eighteenth century the Austrian Habsburg Empire took control of the area and revolutionized Milan's economic, cultural and administrative structures. Napoleon invaded triumphantly in May 1796, but even before his death Lombardy was returned to Austrian hands by the Congress of Vienna of 1814–15. The Milanese agitated constantly against their Austrian rulers, but it wasn't until 1859 that they managed to oust their occupiers and become part of the Kingdom of Piedmont, which two years later evolved into the Kingdom of Italy. The Fascist Party was founded in Milan in 1919, and it was from there three years later that Mussolini started his March on Rome. It was in Milan that Mussolini, his mistress and fifteen leading Fascists were hung upside down from the Esso station in the Piazzale Loreto on 29 April 1945. During the later stages of the war, British and US bombers had targeted the city heavily but amid the destruction, the cathedral and its priceless contents were virtually unharmed. Today, it stands there still as the symbol of ... what?
From across the square it looks like a forest in stone. Pinnacles sprout from every column. More than 3,500 statues crowd the exterior walls. The roof is crowned with a mass of spires and gargoyles. At the main west entrance, the doors swarm with marble, low-relief sculptures of birds, insects, fruits and animals so vivid as to seem alive.
Once inside, a coolness and a calm descend. Deep shadows are everywhere, and the darkness is deepest at the centre, under the spire, where a huge crucifix hangs in the gloom. Cutting through the darkness are shafts of light, prismatic and even ethereal. The eye travels through the shade and around the columns, across the intricate stonework, and along the sweeping high-beamed roof, but it is always drawn ineluctably to the light, to the great stained-glass windows at the east end, often repaired but still bearing much of the same design that was put there in the fourteenth century, and much of the same glass.
And as the glittering Milanese spring sun streams through the glass into the perpetual twilight of the interior, we are drawn to the image of the sun that sits in the centre of the pattern — a deeply ambiguous image representing at once the eternal ideal of the light of God's truth and at the same time the very temporal might of the Visconti family, who paid for the window and whose family emblem was the sun.
No cathedral is more overtly an emphatic statement of political power than Milan's. But there is also no mistaking the mysterious directions in which it points — inward to an inner darkness, and outward to the brightest of light.
Oxford, 1968. The middle year of three spent studying politics, philosophy and economics — the year when you didn't have to work for exams, either your prelims or your finals. A year when it really did feel as though Oswald Spengler's decline of the West had begun. It was the year of the murder of Robert Kennedy (he who had quoted George Bernard Shaw's "Some look at things that are and ask why? I dream of things that never were and ask why not?") It was the year of Martin Luther King's murder, too ("I have a dream ..."). It was the year of the Prague Spring — and then of the Russian invasion in August. Throughout, there was Vietnam: weekend after weekend, buses took students down to London to demonstrate in front of the US embassy in Grosvenor Square. And, hanging over everything, there was the Cold War with its threat of Mutual Assured Destruction. It was a year when dreams and hopes seemed to be snuffed out one after another. It really did seem as if some sort of apocalypse might be at hand.
Mentally travelling back forty years, from Lake Como and Milan to reading politics, philosophy and economics among the spires of Oxford, how dramatically simple those days seem. This isn't just the added historical perspective, or even that being young made everything seem possible then. They really were the days when big issues were deeply contrasted, the days of clear polarities, when all seemed black or white. Everything was either exciting or outrageous. There was nothing to be indifferent about.(Continues…)
Excerpted from "Good Value"
Copyright © 2010 Stephen Green.
Excerpted by permission of Grove Atlantic, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
With Special Thanks to ...,
1. In My Beginning Is My End,
2. The World's Mine Oyster,
3. The Global Bazaar,
4. The Home Stretch to a New Jerusalem?,
5. From Tulips to Subprime to ...,
6. Why Should I Do Anything for Posterity?,
7. Faust and the Rich Young Man,
8. In My End Is My Beginning,
What People are Saying About This
Stephen Green is in a universe of one: the only chairman of a major international bank who is also an ordained minister of the Church of England. . . . At a time when bankers are being pilloried for bringing about a global economic meltdown, this is an unusual and thoughtful disquisition on how to conduct oneself in a world of high finance and ambition, in, as he puts it, the global bazaar.” The Wall Street Journal
“Engaging and convincing . . . The shade of Marcus Aurelius permeates these meditations on money . . . Green is deeply acquainted with poetry, philosophy, history, and economic theory past and present.” The Times (London)
“Eloquent . . . Inspiring . . . Green strides fluently between T. S. Eliot and Karl Marx, Goethe and Camus, Adam Smith and the Prophet Isaiah. . . . The journey he takes us on offers stimulating intellectual scenery at every turn.” The Independent
“A striking personal insight into money and morality by someone on the inside. Green asks how and why we create wealth and explores its future place within an increasingly globalized world.” Financial Times
“An intensely intimate, refreshing, and at times searing read . . . Should be required reading in business schools and boardrooms where flip charts and Powerpoint presentations dominate.” Evening Standard
“Exciting and original . . . Green reflects on the astonishing impact of globalization on human history and consciousness before going on to suggest ideas for how the financial and wider business system can be fixed or replaced.” The Guardian