[OPE] The Values behind Market Capitalism, at Davos meeting 2009

The Values behind Market Capitalism

. Tony Blair . Stephen Green . Indra Nooyi . Shimon Peres . James J. Schiro . Jim Wallis
Moderated by . Maria Ramos

Thursday 29 January 2009

As the global financial crisis deepens, the inevitable question arises on whether the rules and values that were in place to safeguard the capitalist system have failed or whether the system itself is in need of an overhaul. Panellists agreed that, while the financial system needs to be fixed, the solution is not excessive regulation that stifles innovation and free enterprise. A serious reflection of the morals and ethics underpinning the system is clearly warranted and, in particular, the concept of the common good has to be revisited.

Tony Blair, UN Middle East Quartet Representative and Member of the Foundation Board of the World Economic Forum, argued that "the free enterprise system as a whole has not failed. The financial system has failed." He noted that the financial system was originally there to serve the wider economy and the wider economy to serve the wider society. The financial system wasn't meant to be an end in itself. Unlike others before, this crisis is global in its impact. But part of the problem, he added, is that "the integration of the world.has moved far ahead of the political capacity to express that integration either institutionally or in terms of the alliances that we have."

He added that it would be "quite bizarre" to still talk about the G8 as being the forum for the world's leading economies and "unthinkable" for it to attempt to tackle the crisis without involving other countries. A major challenge for the Obama administration is how to unwind the present strategic alliances and put the right ones in place, Blair said.

Stephen Green, Group Chairman, HSBC, UK, said having long-term sustainable value is key to shareholder value. He noted that values that once served the system well have seen gradual erosion. "This is about values that have developed in the markets in recent years. We have moved from the old cliché 'my word is bond' to a culture and atmosphere where 'if there's a transaction, if there's a market for it, and I have a contract, and it's legal, that's it; I don't need to think about the underlying right or wrong, suitability or unsuitability.'"

Moving forward, the moral order and not the legal order has to prevail, said Indra Nooyi, Chairman and Chief Executive Officer, PepsiCo, USA. Capitalism has to be tempered by sound values and not just those that worship the "almighty buck". She said: "You can have laws on the books but it's personal compliance with those laws that is important." Another problem contributing to the crisis, Nooyi pointed out, was that poorly-paid regulators were hard pressed to keep pace with the innovation taking place in the financial markets.

Jim Wallis, Editor-in-Chief and Chief Executive Officer, Sojourners, USA, believed that the right question to ask is: "How would the crisis change us?" If it does not change people for the better, all the pain and suffering will be in vain. He said a contributing problem was the excessive trust in the invisible hand without thought to the virtues that should be brought to bear.

James J. Schiro, Group Chief Executive Officer and Chairman of the Group Management Board, Zurich Financial Services, Switzerland, said the big question is: "Do we have the right leader in the right place with the right moral compass" to restore the confidence and credibility needed at this time?

http://www.weforum.org/en/knowledge/Events/2009/KN_SESS_SUMM_26979

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Received on Thu Jan 29 19:52:51 2009