An excerpt from Necessary Evil: How to Fix Finances by Saving Human Rights by David Kinley
Of the ailments of the financial sector and their causes, one stands out above all others: the capacity of finance’s prevailing culture of self- assured exceptionalism (and the political clout it buys) to resist fundamental change. The world of finance has become so confident of its role as the élan vital of the economy that it seldom need concern itself with the exogenous consequences of its actions, up to and including the possibility of its own collapse. In large part, it is either indifferent to matters beyond its borders, or dismissive of them with vague references to trickledown benefits from the expanding wealth it creates. Most of all, this level of self- possession has enabled bankers blithely to neither accept responsibility for the financial market chaos of 2007/ 08, nor feel the need to “give . . . any indication that they are prepared to alter their business practices sufficiently radically to avoid a repetition.”
Even when banks are repeatedly prosecuted and fined for criminal behaviour and questions are raised about the evidently poor state of financial corporate culture that permits or even encourages such behaviour, bankers are prone to react with petulance, sometimes bordering on the absurd. “Adolf Hitler comes to mind,” is how David Murray, one of the Australia’s leading bankers, responded to the suggestion made by the country’s chief financial services regulator
(the Australian Securities and Investments Commission [ASIC]) that the bank executives could be held criminally liable if bank culture tolerates or encourages breaches of corporate or criminal law. Despite the fact that a string of legal scandals dogged Australian banks at the time— including allegations of rigging of benchmark interest rates, systemic failures to ensure the probity of financial advisory services, and endemic life insurance malpractice— Mr. Murray apparently considered such a response appropriate. Perhaps his indignation stemmed from the fact that he had recently chaired a year-long Financial System Inquiry that, while conceding that “a persistent theme of international political and regulatory discourse has been the breakdown in financial firms’ behaviour,” had summarily dismissed any notion that bank culture should be regulated by parliamentary legislation or government policy. Or, maybe he was simply comforted by the likelihood that his audience on that occasion would be sympathetic to his remarks (it was a banking and wealth summit). Whatever the case, the episode graphically illustrates the distance that still exists between finance’s view of itself and the expectations made of it by the rest of society.
How have we come to this? Money, after all, is nothing more than “an instrument which men have agreed upon to facilitate the exchange of one commodity for another,” as Enlightenment philosopher David Hume put it. His explanation of it as oil for the wheels of trade, and that by way of trade and commerce individuals and societies are best able to secure the basic necessities and conveniences of life, is as accurate today as it was 275 years ago. Finance, or the management of money, is but a means. An important, even essential, means to be sure, but its efficient functioning is not an end itself. It is the ends to which we put the facility of finance that really matter, for while finance may be a mere instrument, it is not a neutral one. In the same way as water can sustain or destroy, and a gun can liberate or kill, so money can create and devastate. It all depends in whose hands it lies and what is done with it. As individuals, and through the organizations we engage with and the governments that represent us, we have the power and responsibility to fashion its use in ways that promote widespread human welfare rather than diminish it.
It is this point that has been lost sight of, both inside and outside finance. Finance’s facilitative role has to be explicitly reconnected with the goals we want to achieve through its agency; its role as a servant of economic and political processes, not their master, has to be underlined. Human rights can assist in this regard. Not by setting “standards for growth or economic productivity,” but by setting “standards for the quality of living that individuals are able to achieve and the calibre of services that they receive,” as Magdalena Sepúlveda argued when she was the UN Special Rapporteur on Extreme Poverty and Human Rights.
It should not surprise us that the human rights expressed in international and domestic laws can be held up as goals toward which a financial system ought to strive to contribute. Strong, sustainable economies and safe, stable societies both depend on and promote the very political, social, and economic goods evoked by human rights— the rule of law to defend basic freedoms to life, individual security, nondiscrimination, speech, thought, religion, privacy, and assembly; to be able to vote and to participate in government; and to be assured of minimal welfare rights to food, health care, education, housing, sanitation, appropriate employment, and adequate conditions of and safety at work. Therefore, by way of its key supporting role in the establishment and maintenance of strong economies and stable societies, finance is inextricably committed to these human rights goals.
Levels of human rights protection act as a barometer of the health and success of a financial system precisely because they “underpin development, growth and stable societies through providing accountable institutions, healthy, educated and skilled workers, security in old age, and a safety net in times of economic disruption or transition.” So when a gross distortion in one or more of these human rights features is accompanied by severe failure in the financial markets, it signals the connections between the two worlds, even if they are not always immediate or obvious.
If, then, we are to acculturate finance in ways that reestablish its subordinate role in the pursuit of broader economic and social ends, human rights can and must have a part to play. Determining precisely what part is a responsibility to be shouldered by both financial and the human rights communities. Importantly, the process also presents an opportunity for them to do so in ways that are mutually beneficial.
Necessary Evil: How to Fix Finances by Saving Human Rights by David Kinley will be launched in Sydney on Wednesday 13 June at an event hosted by the University of Sydney Law School and Australian Lawyers for Human Rights. For more details and tickets visit: https://www.trybooking.com/book/event?eid=382914&
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