G20 Prologue: The Quest for Moral Capitalism

Wednesday, 25 March 2009 | posted by SimonM
Economy, G-20 London Summit 2009

Scrambling through the wreckage of the global economic system, I've stumbled across a hardy group of politicians who believe they've found the cause - and consequentially, a solution, to our current woes.

Throwing off the shackles of their previous political affiliations, they have come rushing to the altar of ‘moral capitalism,' a system where we condemn the excesses and risks of the past, in favour of the more righteous pursuit of a capitalism that, well, doesn't break quite so easily.

Expounded first by Barack Obama in his presidential campaign, picked up by David Cameron in his speech to the World Economic Forum in January, and now repeated for domestic consumption around the Western World - Kevin Rudd in my home country of Australia, Nikolas Sarkozy in France and Angela Merkel in Germany to name but a few - it's alluring. It draws us into a vision of prosperity and justice for everyone around the world, with the possible exception of the bankers who got us into this mess - who we seem happy to make enduring objects of derision.

It's a case that was most eloquently put Stuart, a friend of mine who's just lost his job. Knowing that I was off to the G20, he asked me to take a message with me - "we need replace the system that makes $20 profit and screws people over. We need to replace it with a system that makes $19 and screws no one."

And, as an anti-poverty and climate change campaigner, it sounds fantastic. But, on the eve of the G20 meeting in London, I wonder just how much of this we will see come to fruition in the coming months.

So, I've spent the last few weeks chatting to economic and political experts, campaigning colleagues and friends, to get a sense of what moral capitalism needs to encompass - and there's strong consensus around three broad categories of action:

1. All people are valuable: make the international system more equitable through trade reform, debt relief, improved governance and better aid flows.
2. Low Carbon: deal with climate change and the economic crisis at the same time.
3. Effective not just efficient: improve regulation and information flows to reduce the likelihood of price shocks and market volatility

If we do it right, I have no doubt that these reforms could alter the course of our common history - ending extreme poverty within a generation, averting catastrophic climate change, and setting us on a path of growth that rewards people throughout the economy.

But, the London Summit is just the beginning of this journey. We need to recognise that although the G20 provides vital political cover for world leaders to implement unpopular reforms, they still need to win elections (or in the case of China, avoid civil unrest). The reforms that we see are likely to be the most politically expedient, rather than the most important.

Alongside this, we must remember that coordinated international action is hard - as we've experienced for so long on issues of climate change and poverty alleviation.

But, there's hope - we have done it before. A generation ago, the world's leaders committed to eradicating the scourge of smallpox from the planet, a feat that was completed in 1983. Twenty years ago we gathered together in Montreal to contain the Ozone hole by banning CFCs. And, over the last decade we've reduced global measles deaths by 74% through the Measles Initiative and the leadership of the WHO and Gates Foundation.

Change is possible, but it takes a long term commitment from a large group of people, to which the G20 meeting in London is just an early step.

So, if you're after a prediction for the outcome on the pursuit of moral capitalism next week, I'd say that we'll see a good deal of talk about addressing climate change and extreme poverty without much action, and a lot of promises around regulatory reform, with a commitment of follow up and continued dialogue by world leaders.

And, if we get to that point, I'll be happy, as the longest journey starts with a single step.