The 24 Dispositions

I mentioned the 24 Dispositions in an earlier posting. These were drawn together by an inter-faith group in Birmingham as a basis for religious education. Here they are.

Being Imaginative and Explorative

This disposition requires lateral thinking, the capacity to see things differently, together with the capacity to see the promise and potential of the world about us

Appreciating Beauty

This disposition requires a deep sensitivity for the world about us, an awareness of the nature of human responses, and the capacity to make qualitative distinctions.

Expressing Joy

This disposition requires an awareness of human affective responses and certain expressive capacities, for example, in music, in language, in body language.

Being Thankful

This disposition requires an awareness of relationships of dependence and of not being wholly self-sufficient and in control of our own well-being. It requires a willingness and expressive capacity to acknowledge the relationship of dependence and the good that flows from it.

Caring for Others, Animals and the Environment

This disposition requires an awareness of the needs of others (and other things) together with a feeling that these needs matter, and the will to do something about them.

Sharing and Being Generous

This disposition arises out of an awareness that others may be dependent on us, the sense of wholeness that may come from our relationships with others, and the will to please others.

Being Regardful of Suffering

This disposition arises out of the affective capacity for pity, as well as out of an attention to the situation and condition of the other and the will to help or to maintain one’s solidarity with the other.

Being Merciful and Forgiving

This disposition presupposes the recognition that the unity and solidarity that exists between all people and all things is readily broken through aesthetic and moral offence. It also presupposes an acknowledgement of offence, the desire for unity and the will to bring it about despite the cost it may entail.

Being Fair and Just

This disposition depends on a recognition of the claims of equity and consistent reasoning, together with the will to restore and to maintain the state of equity.

Living by Rules

This disposition presupposes that the world behaves in law-like ways and that the society on which we depend requires rules for its very functioning. Whilst it is acknowledged that the rules of nature are given (heteronomous), it is supposed that: A] The rules of society are collectively agreed and therefore binding, and B] The rules of personal behaviour are self-imposed (autonomous). A law-abiding disposition depends on the will to live the ordered life.

Being Accountable and Living with Integrity

This disposition is the capacity and willingness to be answerable for one’s actions, formally and informally, to others and to oneself. Integrity presupposes that one would always act in such a responsible way even if one could or would not be held publicly to account.

Being Temperate, Exercising Self-Discipline and Cultivating Serene Contentment

This disposition requires a good deal of self-knowledge and a mastery of the affections to ensure these affections are proportionate and subject to reason.

Being Modest and Listening to Others

This disposition presupposes self-knowledge and an understanding of others together with a capacity to evaluate what each one can contribute to cultural life. As such, it avoids

false modesty on the one hand, and boastfulness on the other.

Cultivating Inclusion, Identity and Belonging

This disposition recognises that human beings are never isolated selves but exist and can thrive only in relation to others. This relationship ranges from the intimate relation of two people to the relationships that constitute families, groups, communities, nations and world. Deliberate exclusion prevents others from developing relationships through which they can thrive.

Creating Unity and Harmony

This disposition recognises that different people/creatures have different interests, needs and capacities, and as such they can also frustrate one another and cause aesthetic, moral and religious offence. The disposition also requires the desire and skill to restore relationships.

Participating and Willingness to Lead

This disposition presupposes a self-knowledge and an appreciation of what one can contribute to collective life, together with a willingness to be proactive.

Remembering Roots

This disposition recognises how the past can shape the present and the future through its promise and obligations. It notes what the possibilities of human life are and hence what defines human life.

Being Loyal and Steadfast

This disposition presupposes an understanding of the needs of others and a willingness to offer them support in the face of opposition and destructive powers.

Being Hopeful and Visionary

This disposition might reasonably be linked to being imaginative and explorative. The attitudes of expectation and anticipation are fundamental to some forms of religious life and contrasts sharply with the mood of despair. The disposition of being hopeful should be distinguished from being fatalistic in which everything is determined and from a reliance on ‘luck’ in which people depend on chance.

Being Courageous and Confident

This disposition should be contrasted with foolhardiness on the one hand and with cowardice on the other. It requires a good understanding of situations, coupled with selflessness and a commitment to the well being of others.

Being Curious and Valuing Knowledge

This disposition arises out of a fundamental human interest in which knowledge is valued for its own sake. Affectively, it involves a love for others and other things, just as they are, and in all their complexity. This should be linked to a determined will to discover this strange complexity.

Being Open, Honest and Truthful

This disposition presupposes an understanding of others as ends in themselves and therefore not to be manipulated or used without their agreement. An affection for the truth and for the well-being of others underwrites the integrity of any communication and the clarity of its meaning.

Being Reflective and Self-Critical

This disposition presupposes an awareness of the confusions of motives and the comforts of fictions. It requires a will to eschew such comforts as false consolations and a determination to be clear about what is the case and to evaluate rightly.

Being Silent and Attentive to, and Cultivating a Sense for, the Sacred and Transcendence

This disposition understands that through language and concepts, human beings impose their own structures on the realities that confront them. This imposition secularises the realities and renders them amenable to human domination. Attentive silence is enabling the realities to ‘speak’ for themselves.

Getting There

Being the final part of an eight part series on the Virtuous Economy and the Common Good.

This is no small task indeed given the state that we're in. For a full realisation of a virtuous economy a timescale of a generation or more may be required. Just as it took several generations to throw away the values of centuries and the manufacturing industry that we had built up over more than a century and a half it may take a comparably long time to restore them.

What we are now left with is an economic system and philosophy which is the worst version of itself, but it is one that it is not incapable of redemption - in the longer term - given the will to do so and a policy that is sufficiently firm, direct, consistent and well advised. Closely connected to this is the widely noted moral decline on which we have commented. So what should the government do in response to the mess that has been allowed insidiously to develop?

The government must operate a comprehensive economic policy that commands the support of manufacturing, engineering, the industrial sector more generally, agriculture, mining, fishing and genuinely productive areas related to these. There will also need to be sustained and unthreatened investment in scientific research, engineering and medical technology and research. Once established, the fulfilment of this policy should be an unambiguous resourcing priority.

It must be unafraid to establish virtuous exemplar institutions wherever needed. There must be exemplary conduct by national leaders, both political and business and the government should set up appropriate bodies to bring this re-education about. In these days of conscience dimmed, there should be increased recognition of the role of the Churches and religious organisations through expanded informal outreach.

Secular and voluntary organisations with the common good at heart need encouragement rather than cutbacks. Home and family life should be more clearly valued by society. Political systems should be less tribalistic so allowing more consensus building. Citizenship programmes should be expanded and recast in terms of virtuous conduct and the common good. All this and more, to be sustained for many years.

The macro foundation of economic policy should be a genuinely Keynesian approach - not one in name only. This means major projects established and where necessary delivered by government. I take the view that it should also involve the setting up of public sector exemplar institutions such as municipal banks as previously discussed. In the reduction of the fiscal deficit, timescales should be revised and more emphasis should be placed on taxation and less on cutting expenditure leaving room for investment. There are several reasons for this.

Firstly there is the obvious fact that reducing public expenditure on projects and services directly reduces employment, income tax and VAT receipts and increases expenditure on other heads of account such as unemployment benefit. There is still an overall net reduction of course - providing a low enough weight is attached to the depressing effects of lowered expectations of employment and income in the wider population and consequent reductions in expenditure and VAT receipts on this account. In Keynesian terms there will also be a reverse multiplier effect - the knock on consequences of people having less to spend.

It is well recognised that the greater part of the burden of present policies is born by those who are less well off. This is entirely wrong both morally and in economic terms. It need not be so. Those who can afford to pay more in tax should do so - indeed some notable figures both here and abroad have declared their willingness to contribute more. This in contrast to the picture that has been painted of a mass exodus and a decline in entrepreneurial activity. Let us test this blatant cry of 'wolf!'. Let us see if we can scrape along with a few less executives on bloated salaries, bonuses and padded out remuneration packages.

At the same time let us encourage public spirited attitudes and the beginnings of a return to loyalty. There is in fact little or no historic correlation between entrepreneurial activity and taxation of income at higher levels. Initial attitudes depend to some extent on the direction of travel. For example, there was much joy at the introduction of a 60% top income tax rate when this was reduced from 83% by the conservative government of Mrs Thatcher. Most of those paying the highest rate are internal promotions in large companies and not entrepreneurs, whose motivation is not driven solely by money.

The government should lead the way to a revised international approach to the basis of trade. Globalisation is not free trade - far from it. There should be an inter-governmental push to rein in globalised corporations and their owners and there should be less willingness to accept excuses from them or from countries with unfair and unsavoury economic and social practices.

Fiscal and monetary policy should aim for sustainably expanding and balanced demand and related wider policies and practices should, as we have mentioned, involve capital projects and ensuring that, pressing the boundaries as far as possible, the demand is met from domestic sources and that in capital projects employment and on the job training of younger people is to the fore. An example of a large capital project would be the construction of a Severn barrage that would contribute 7% or more of total electricity demand. This should have been done long ago of course, in place of earlier tax cuts.

The Keynesian concept of the balanced budget multiplier should also not be overlooked. If the taxation of more affluent people is increased and there is a corresponding reduction in taxes and deductions from the pay of less well off people then demand increases (because of a higher marginal propensity to consume at lower income levels) giving a stimulus with no initial budgetary consequences and indeed a positive benefit in revenues as the positive knock-on consequences work through.

Furthermore, as we have seen Quantitative Easing is of limited value in getting funds to productive sectors of the economy. It is not so effective as infrastructure projects in which governments have become frightened directly to engage. High speed rail (and its rather pumped up benefits) is a partial exception but one can think of much more productive ways to spend this colossal sum either within the transport sector or beyond it.

The age of one club golf are well and truly over. In any case, the direct effects on manufacturing investment of low interest rates have in the past been damped and lagged at best. Eventually however lower rates should result in lower required yields and increased long-term investment if the conditions of lending are appropriate. But as smaller firms know to their cost this is not always the case.

To this can be added appropriate levels and forms of taxation and public spending - I say appropriate rather than low (neither term being uniquely defined) although levels are a matter for debate. For example in the case of deductions from income, the irrational structure of national insurance contributions could be replaced with a flat rate covering all income levels. This would mean a top rate of deductions of maybe 56% - below the euphorically greeted 60% of previous mention and resulting in a mild balanced budget multiplier effect. The tax structure also affects payout pressure and should reward longer-term outlooks.

A pro-active environmental policy far from hobbling industry should be constructed to provide stimulation. Environmental standards achieved in advance of other countries but, crucially, which are likely to be followed, should give domestic suppliers a competitive edge.

Government should help to make winners and widen support where we still have a current edge. I hesitate to say 'comparative advantage', a dubious concept that has provided a rationalization for retreat from manufacturing. The view that the winners we're left with should determine our future is inherently passive and dangerously vulnerable.

Traditionally one thinks of the concept of comparative advantage in terms of tangibles such as natural resources, but it is now linked to less tangible or persistent things such as exchange rates, regulatory regimes, skills, language, time zones and for manufacturing, commitment to long term investment.

Trade in manufactures is far from free, a fact from which our rivals gain more than ourselves. There is a distinction to be made between globalisation and its attendant ills and the dream, for some, of free trade. Government also means local government. For example, Birmingham does business in the billions and has extensive local knowledge and should be resourced for pro-action complementary to existing initiatives.

It should be said though that the advent of relative (and for some people absolute) austerity may have an upside. This is because the unwelcome change gives people the opportunity to reflect on the 'disvalue' of consumerism and the chance to adopt simpler and more worthwhile ways of living.

But beginnings can be particularly productive when the curve rises quickly and some of the most fruitful gains can be achieved first. But it is also as well to be aware of what will not work. For example reliance on services and in terms of production the strategy of trying to shift the economy ever more towards 'higher value added' activities - as if these were somehow protected areas and inaccessible to the countries that have acquired so much of the rest of our industry.

This may appear briefly to work, but unless action is taken we should be sure that these activities will eventually go the same way as their 'lower value added' predecessors. To imagine otherwise is at best wishful thinking or at worst smacks of a type of an unsavoury and ignorant superiority.

Furthermore, the proponents of this approach of keeping ahead of those who have taken so much of our industry by moving up a line seem to assume that there is an ever rising and straight line. In contrast, I take the view that what is involved here is a rising curve but of declining slope - and also which is likely to be finite in length. If this is the case, the future consequences of this attempted 'moving up the curve' approach - which is in all essentials a retreat - is all too clear.

I have stated in an earlier section that steps need to be taken nationally and internationally to retrieve the industry already lost. The country's manufacturing and engineering sectors must be rebuilt - they, along with agriculture and mining represent the economy's productive base. In the discussion about the future of the Euro, it is notable that the countries which are struggling most are those, as was recently said of Greece in particular, that don't produce anything.

In macroeconomic policy the simple truths must be realised that in the absence of demand, there will not be production and that in the absence of production there will not be job creation. In this it should also be understood that the true meaning of the oft used word 'economise' is not to make minimum use of a scarce resource but to make the best use of it.

The advancement of the common good requires the provision of good public services and simple and trustworthy services now associated exclusively with the private sector - such as banking. There are many who take the view that there is a role - indeed an enhanced one rather than the continuously diminishing one we have seen in recent decades - for these services to be provided by the public sector - or at least by organisations that operate with public service values.

All this stands in stark contrast to the ethos prevailing in certain sectors such as the banks, specific companies and, regrettably, in a good deal of the private sector. Economic actions on a robustly Keynesian and direct basis will help enormously in the medium term. Psychological and moral changes will take longer but they are equally important if we are not to encounter the same near catastrophic circumstances once again.

Is all of this impossible? Certainly not. It is just very different from what we have been doing these decades past. It is difficult and in some respects not unlike the situation with climate change where we are surrounded by scientific evidence with a sprinkling of influential, self interested deniers.

The measures involved will take a long time to have effect but they are non the less urgent and the consequences of not taking action are no less severe. We are faced with choices we do not want but if, in the longer term, we want out of austerity, anxiety and lost esteem then this is the path we must take. We must not return to the state that we're now in.

The Virtuous Economy and The Good Society

Being the seventh of an eight part series on the Virtuous Economy and the Common Good.

The Good Society is one with a vision that is shared by all citizens and in which all are participants and is one that is founded on longstanding social and moral values that are endorsed both individually and collectively.

It is a society that operates through a virtuous economy, enhancing the common wealth and the common good for all of its citizens, present and future. And in their turn, each generation, individually and severally considers anew - and acts upon - the question: “What is required of us to contribute to the common good and to sustain the good society?”

At a more local level, the good city within a virtuous economy can be described in the following way: it is a city which has restored values - the values and principles upon which its success was built - that enable it to enhance the common wealth and the common good and to seek the harmonious common and sustainable life - and where there is a citizenry of good intent.

The good society is a cohesive society in which all see themselves as participants and having a spirit of mutual respect and openness. People work together for understanding, respect, justice and peace, for a clean environment and sustainable communities.

The good society is one which succeeds in valuing all people, both their innermost aspects and their relationships one with another. The good society is one in which it is realised that: 'No man is an island', it being understood that people are mutually interdependent - all are responsible for all.

The good society is one where each individual can, if so disposed, make a difference (a positive contribution to the common good) through their own abilities and personality and is encouraged - and enabled - so to do.

It sees that everyone, can make a difference every day by the way that they live, recognising personal responsibility and the ability to affect beneficial change through their relationships both professional and personal, through their conduct as consumers, through lifestyle changes, through being active and engaged in their communities and in society as a whole.

Within an accepted context, a spirit of good citizenship sufficiently imbued and accepted on the foundation of common values, will bring forward the offers of time, energy and resources that will make these differences possible.

Beyond the individual, clear roles exist for the family - nuclear and extended - mainstream religious organisations and educational institutions in sustaining this process.

People may think that what they can do as individuals is but a drop in the ocean of need. But in terms of this often used and uninspiring metaphor, it should be remembered that without the drops there would be no ocean.

Therefore in putting service before self, it is also recognised that small service is true service and that what matters most in solving the problems faced today is what individual people do in their communities and in their daily lives.

An action is said to be virtuous if it has characteristics that will unambiguously enhance the common good. There are many virtuous characteristics, but in this context they will certainly include the following:

Living with integrity and being honest and truthful in both private and public conduct.

Seeking harmony and consensus, striving to unite rather than to prevail over or to partition.

Being loyal and respecting loyalty in everyday life, business and government.

Showing respect for all individuals in society and recognising their worth and their unique personal and moral qualities and potential.

Acting, where possible, to give meaning and purposefulness to the lives of individual people and enhancing the possibilities for fulfilment.

The good society should be concerned, wherever possible, with the conservation - or indeed where possible with the generation of - natural resources rather than the current, failing, exhaustive focus on their exploitation and depletion regardless of the impact on and the requirements of future generations and the human and environmental costs.

In this it is vitally important to recognise that the earth is not a possession that belongs to us. Rather, we belong to the earth.

For their part, the great religions should interpret religious tradition to create an ‘autonomous space’ for the common values of our society. Secularists (here meaning the benign, civilised and more traditional variant of secularism) for their part should appreciate that religious sensibilities could give much needed moral depth to enterprise and direct it away from perilous private adventures and towards the common good.

Good governance is a necessary virtue, aiding and abetting the achievement of common goals and involving itself actively in this process. It would aid the replenishment of social capital, but this also requires the relearning of personal responsibility and the principle of service before self.

The more difficult times get, the more we hear talk about leadership (usually by those privileged or otherwise self-interested individuals who see in themselves the requisite qualities) and its claimed merits. This notwithstanding the fact that 'leadership' of similar ilk in both business and political spheres presided over the road to the present austerity.

But now more than ever new foundations for the concept of leadership are needed. This in order to bring about a type of leadership that realises that it assumes its authority from other people and which changes, or preserves things on their behalf rather than for their own aggrandisement or the private enrichment of themselves or their advisers and acolytes.

It is a leadership that seeks to work with, rather than act upon, citizens. It realises that its power is temporary and that it is a trust that is not to be used purely for sectional, let alone personal interests. And it is a leadership that has as its driving energy the vision shared by society as a whole.

But given the regrettable experience that we and other countries have had in recent decades in both business and government, it is clear that stewardship is a far more urgently needed and important quality than what has been presented as leadership. The two are not mutually exclusive of course, but seem rarely to be combined these days.

Stewardship is something in which we can all engage every day, for example by taking care of our local environment, looking out for and not seeking to exploit each other, safeguarding what is left of our industry and commercial assets and preserving the values on which have served our society so well.

A citizenry of good intent, the virtuous economy, the concept of stewardship, commonly held moral values and, with due consent, the many areas of leadership, are the foundations of the good society and the basis on which its aims are realised.

The Virtuous Economy and The Common Good

Being the sixth of an eight part series of postings on the subjects of the Virtuous Economy and the Common Good.

The Common Good is viewed as the wellbeing of all citizens. This will include social, psychological and moral components as well as material goods and services. In its purely material aspects it will refer to what ought to belong to everyone by virtue of their common humanity. Any form of economic organisation may in some of its aspects inadvertently promote the common good. The virtuous economy has this as its primary objective.

But the realm of the common good goes well beyond materialism and questions of ownership as narrowly defined. For example, it will include non-possessive attachments such as that which was felt by the community for a long respected company such as Cadbury's or even long respected products.

The common good therefore has as important elements both local and national pride and collective endeavours to which groups or society as a whole subscribe. It therefore relates to both individual and social fulfilment.

The common good includes together people and the environment, and the present and future generations. It takes account of their temporal and spiritual needs, the legacy that one will leave for the other and the well-being of the body, spirit and planet.

In terms of policies or behaviour, an action unambiguously enhances the common good when at least one of these elements, as decided by judgement rather than targets, improves with none being diminished.

Clearly, as with traditional measures of social welfare, the common good is unambiguously degraded when one person is diminished with none being improved. But also, for example, partisan monetary gains made at the expense of other citizens will usually degrade the common good - the outcome will depend upon whether the redistribution is from poor people to rich or vice-versa.

Society should be founded upon the common good – the common wealth as it were - enhancing the well-being of everyone, with none excluded and where well-being is defined in a broad way to include all aspects of quality of life.

Our political system should be at the service of the common good - in this respect it most certainly should be 'fit for purpose'. So also, ultimately, should businesses, not-for-profit organisations and other major social institutions such as schools, colleges and universities and the faith communities.

All of these are valuable and honourable institutions, professions or vocations if operated in this way - pursuing their endeavours, their social engagement and their quest for knowledge and understanding and making their decisions in 'the reasonableness of the common good'.

Any attempt to enforce decent behaviour on financial institutions, globalised corporations or some other companies through compliance with external rules is doomed to failure and procrastination. It is impossible to supervise or regulate all activity and an effective approach must include the cultivation of moral character throughout economic activity, there must be a renewal of both social and individual conscience and the formation of character that willingly adopts internal rules.

A profound cultural renewal is essential to achieve this in a society and a world that needs to rediscover basic, acceptable values on which to build a better future. Such a renewal will not be easy since a great deal of damage has been done to the moral fabric of both the economy and society as a whole.

However, this can be done, and a start should be made. People are increasingly alienated by a ruthlessly selfish society, they want to belong to a world in which people have a decent regard for one another and so are valued themselves.

Instinctive habits of behaviour need to be developed that reflect genuine respect for individuals and society. A desire to do good - in other words behaving virtuously - should become second nature. This is the basis of the virtuous economy and the enhancement of the common good.

Virtuous Exemplar Institutions

Being the fifth of an eight part series of postings on the subjects of the Virtuous Economy and the Common Good.

The state that western capitalism has been allowed to drift into is such that much talked about and often postponed regulatory and structural reforms cannot address all of the deep seated issues. This is because the spots on the financial and other leopards run so deep and because of the extent of their influence one way and another. Dates are put back, ways will be found round and, after a time, pressures reapplied for relaxation of conditions on the need to remain 'competitive' and the promise that 'competition' would provide what customers really want.

This latter is, of course, not so outside of the entirely theoretical context of 'perfect' competition. The 'competition' within the all too common loosely cartelised situations such as banking provides what the financial institutions and not their customers - particularly the smaller ones - want.

Outside of the narrow financial context there are the deep seated issues of the abandonment of manufacture and a widespread unwillingness to see the long term interests of the nation and local communities at the very least alongside 'shareholder value' and executive bonuses.

As a result other ways need to be sought to provide ordinary people with the simple and trustworthy services, particularly related to saving, that they so earnestly desire and which need to be provided in their interest and that of the common good. One way of achieving this would be the establishment of what I term Exemplar Institutions set up by the public sector (or conceivably by the third sector) that provide just such services.

A start could be made in terms of banking services with the re-establishment of municipal banks. 'Security with Interest' was the worthy motto of the late lamented Birmingham Municipal Bank from its foundation around 1916 right up to its closure on 31st March 1976. I have been campaigning for the re-establishment of a Municipal Bank based in Birmingham for several years. Never was it needed more than now - and indeed the City Council accepted (with support from all parties) my resolution that consideration be given to setting this up. Alas to date there has been insufficient resolve to follow through on the resolution.

There is a desperate need for a real alternative operating on near-forgotten principles of service with fairness and responsibility. Many people recall the Municipal Bank (and still cherish their ageing passbooks) and the security that it offered with the council guaranteeing deposits. The idea would be to offer complete security to small savers and fair and consistent interest rates for saving, to encouraging thrift - even explaining what this is to some younger people today. There would be no sales pressure and harassment to move to 'better', and for the banks more profitable, financial 'products'.

As well as “Security with Interest” (note the order) there are mottoes inside the former headquarters building on Broad Street reflecting virtues worth re-adopting today such as: "Saving is the Mother of Riches" and "Thrift radiates Happiness". In other words real prosperity comes through saving in a trustworthy institution and you don’t have to be miserable while you’re doing it! The mottoes are couched in language that is heavily Victorian/Edwardian but the underlying message would be real news today.

The Council no longer owns that building but there are plenty of alternatives, especially as the Council plans to reduce the number of buildings it occupies. Furthermore, a Birmingham Municipal Bank could keep both money and jobs in the city and be the means through which the oft-suggested ‘Brummie Bonds’ could be issued to allow ordinary folk to support civic projects (the Town Hall restoration would have been a good example) while offering a secure return. There will be some way to travel however since Government legislation has made the establishment of civic banks difficult and restricts the services they offer.

But a start could be made with a savings bank (as was done in 1916) with the scope broadening later if lobbying of the Government to restore former powers proved successful. This would be complementary to existing Credit Unions, which perform valuable if small-scale services. And while it is true that the commercial banks could attempt to stifle such an initiative (as they tried to do in 1916) such resistance could be overcome.

Birmingham could lead the way again - just as it did back in 1916 and indeed in the earliest days of commercial banking. We are often told that the City should distinguish itself. What better way than by knocking aside the obstacles and putting people first with the renaissance of our own Birmingham Municipal Bank?

This is all very much to be desired in the interests of ordinary people, and of course it would apply to other cities and surrounding areas throughout the country. Since they got their snouts severely bitten by something nasty in the sub-prime trough, the commercial banks have been finding ways to pass on the punishment for their greedy and imprudent conduct to ordinary people. So many of the nefarious things that they do are ‘industry wide’ moves. In effect the banks act as an informal cartel.

There is, admittedly, cut throat competition - to see who can get the most money from people like you and me. This avaricious and profit-bloated ‘industry’ competes only to the extent of how longstanding customers can be denied fair rates of interest on their savings, can be hit with imaginative and often outrageous charges and are provided with low quality services including opening hours that suit the bankers, lunchtime queues in deliberately understaffed branches, the absence of receipts when making deposits, high and unwarranted charges for currency exchange, compulsory use of call centres and much else besides.

Municipal Banks would keep both money and jobs local and be the means through which local bonds could be issued to allow ordinary folk to support civic projects (the restoration of Birmingham Town Hall would have been a good example - that was how its building was financed) while offering a secure return.

There are flies in this healing ointment. Government legislation in 2000 made the establishment of civic banks more difficult (Municipal Banks still exist in name in a few other local authorities but they offer only very limited services to their own staff). Governments have had an almost exclusive focus on access to credit and such like ‘financial services’. What we are considering here is saving and fair, and comprehensible rates of interest rather than shifty packages (where loyalty is penalised with craftily cut rates and spurious ‘tracking’).

In terms of services that put ordinary people first, my view is that direct intervention of this kind is essential and that there is no better way to start to do this than with Municipal Banks. It is sometimes asserted that such a move should be opposed because competition from a publicly owned bank would be unfair to the rest. But an effect on the rest is precisely what is needed and long overdue. The rest have not been afraid to be unfair to the public.

Creeping cartelisation is also a feature of other so-called competitive industries - witness the power companies and their outrageous leapfrogging price hikes. Regulators range from inadequate to useless, and toothless consumer groups are simply ignored. Unmitigated ‘competition’, meaning little more than a profit-grabbing free-for-all, is past its sell by date.

Going beyond banks, if such sectors had a publicly owned firm acting as an exemplar, treating people in a fair, respectful, honest and straightforward fashion this would introduce competition that is socially worthwhile. It would offer security and fairness to ordinary people, presently abused by commercial predators pedalling complex and confusing ‘products’ frequently designed to deceive. Commerce should not be a morality free zone, nor need it be if there was confident, principled intervention.

In a compelling novel, The Historian, a surprising number of librarians turn out to be vampires. Few would turn to this mild profession to find bloodsuckers, there being a richly populated necropolis of bankers, power companies, fuel firms and telecomm providers. BT clearly has the contagion with its hikes in charges for those, typically thrifty and older people, who do not wish to be drawn into direct debit.

The corporate ethics and social responsibilities of yesteryear are but a fading memory and national government similarly usurps its citizens - security of vital data about individuals being discarded for petty cost cutting. So where are we to find the vampire slayers? Enter the unlikely (potential) heroes in the form of local Government.

We need not resort to garlic or even Christian icons and, in taking the brakes off devolution, we could avoid a stake through our global city’s innocent local heart. We must ensure that our services put the ordinary people first, bemused and exploited as they are, and we should restore former services such as a Municipal Bank that would offer a simple and trustworthy alternative to the financial creatures of the night.

Oh for the days when the City of Birmingham also had its own water, gas and bus companies and a highly visible and locally accountable police force. Surely a line-up that would ward off the bloodsuckers and remove the 'need' for savage cuts in local government.

The spread of moral contagion in the financial sector went beyond the banks of long standing as evidenced by the sorry saga of former building societies that ill advisedly threw away their trusted mutual status. If only it would also bring to an end the intemperate behaviour and worthless values that riddle the financial sector today.

We hear much too much about ‘creation of value’, usually for institutional owners and bonus besotted managers and operatives. We don’t hear half enough about the destruction of values that is the core reason for the whole financial and economic crisis. This latest tale of woe is symptomatic of finance as a value-free zone. We now see the breathtaking extent of the pushing of deceptively cheap mortgages in the United States to those who manifestly could not afford them.

But similar things had been going on here. For example ‘self certification’ - where often desperate people seeking a home were offered the tempting chance to lie about their incomes - was almost equally devilish.

In the United States the resulting financial ‘assets’ were mixed up with others in what were deliberately complex and obscure packages which were hawked to lazy, greedy and incompetent bankers abroad.

And how could we as a nation have produced leaders who have over decades allowed - and indeed encouraged - the loss of ownership and the evisceration of the real economy that make us so dependent on such dubious ‘services’?

In 1986 the government allowed building societies to cast caution to the winds, throw away their mutual status and cave in to carpetbaggers. Behaviour contradicting the principles of thrift on which ordinary people are brought up was thus rewarded. But a hopeful fact is that a majority of ordinary people still hold firmly to these values. Indeed these are the very people on whom the greatest cost of the financial turmoil will fall.

What is needed is more opportunity for them to put the principles into practice. This is one of the reasons for the re-establishment of trusted and trustworthy Municipal Banks and other exemplar institutions. I am convinced that there is a major role for the public sector as well as the voluntary sector in the realm of savings and loans.

It should not be confined to clearing up private sector messes, picking up liabilities and organising fire sales. The Government was right to intervene, if only there was a prospect of continuing public involvement in good times as well as bad.

One reason for this, apart from the value of co-operation as well as competition, is that it will take far longer to infuse values rather than value into the financial sector. And please don’t tell me you can’t change ‘human nature’, whatever you might mean by that. If you take this view, expand the company you keep, get out a bit more and speak to ordinary decent people who would never dream of acting like feckless financiers.

It is the nature of such people that is inspiringly human and whose example should be followed. We also need to ensure that remaining Building Societies stay mutual and return fully to their traditional values and approaches. There are continuing signs of unprincipled contagion from the banking sector - particularly taking advantage of, rather than respecting, the loyalty of their savers when it comes to interest rates.

All of this could be done and extended to other sectors if the commitment was there. An economy is not an abstract entity to be worshipped - it is what we choose to make it. The common good can be enhanced with or without economic growth if we choose to do so. Exemplar institutions could be created and moral re-education begun, but I fear it will take more than a long weekend or two to put together.

Overall Well-being in the Virtuous Economy

Being the fourth of an eight part series of postings on the subjects of the Virtuous Economy and the Common Good.

It is a debatable point as to whether broad based measures of wellbeing are or could be useful. Even the Benthamite concept of 'the greatest good of the greatest number' adopted by John Adams and Thomas Jefferson rather begs the question of what constitutes 'good' or indeed 'happiness' in 'life, liberty and the pursuit of happiness...'.

Indeed, shades of meaning have changed considerably over the years, more recently referring to a state of transient euphoria more than a stable contentment in the longer term and a legitimate pride in the real accomplishments of individuals, communities and society as a whole.

Having a job has an enormous impact on people's self regard and well-being. Therefore in any measures employment and wellbeing should be prominent and be policy objectives over and above GDP. Furthermore, as we have seen to our cost, GDP can incorporate unreal and undesirable activities.

Happiness itself however is very hard to quantify adequately - in fact it is probably easier to measure discontent. Happiness is also hard to sustain which is why the deeper seated rather than euphoric aspects should be emphasised.

Happiness can mean a great many things - from the bliss of the moment through the satisfaction of increasing achievements in the prime of life to a value judgement on one's life (and that of one's family) as a whole. In terms of happiness, what are the characteristics that we should value most? Personal satisfaction? The common good? Virtue? Liberty? Life itself? Pride in community and nation?

And equally importantly, society should consider those things that should not be valued? For example, people are not defined by what they own and unvalued items would certainly include those gains that result from unvirtuous qualities such as deceit, violence, exploitation, excessive self-reward and the degradation of the environment.

The more even and measured quality of contentment may give a better guide to overall well-being and the common good, overcoming variations of mood and short term fluctuations of fortune. Contentment, sustainability and the common good must be central to future social and economic assessments and underpin policy formation.

If numerical measures are to be sought beyond the simplest yardstick of life expectancy, while all societal measures are imperfect and can be open to misinterpretation and manipulation, any measure of the level of achievement, ‘satisfaction’ or 'utility' of the population in a virtuous economy should have properties that encourage respect for every member of society.

Therefore measures should certainly not be additive and in fact should take a multiplicative form, the better to reflect the detrimental impact on the common good of individual impoverishment. As an example, consider the simplest model:

V = abc

where V is the overall societal value for wellbeing and a, b and c are the levels of wellbeing for the three particular individuals that make up this modest society.

Thus, for example, if one person is totally neglected (so that one of these components takes a value of zero) the whole then also takes a value of zero.

Furthermore, the formula has the quality that if a particular action concentrates its benefit in one individual, then the gain for society will be less than if that same benefit were more evenly distributed amongst the population.

Consider an example, starting from a position in which the levels for the three individuals are a = 3, b = 3 and c = 3, we would then have an overall measure of 27 since:

V = 3X3X3 = 27

From this starting point, if the result of policy action (or inaction) produced three units of gain which were exclusively concentrated in one person only - say person 'a' - the society would then have reached the overall position of:

V = 6X3X3 = 54

In contrast to this, if the economy was organised so that the three extra units were distributed equally between all three citizens the position of society as a whole would then be:

V = 4X4X4 = 64

and a greater level of overall benefit for society will be indicated and policy measures to bring the about the more even spread would be prompted.

Of course, these are just very simple illustrations of one of the underlying principles only. But one further telling point at least is well worth re-iterating.

This is that if any one individual in the society has a well-being score of zero, that will necessarily result in a value of zero overall for the measure regardless of the levels achieved by other more fortunate members and will indicate necessary policy action and a direction in which to move.

The zero state, and positions near to it, are situations that should of course be eschewed and its avoidance is an absolutely essential factor in the proper workings of a virtuous economy and in any consideration of the common good. The construction of future measures of socio-economic performance should bear these considerations firmly in mind.

Investing for the Future

Being the third of an eight part series of postings on the subjects of the Virtuous Economy and the Common Good.

In the various reviews of spending reductions we have seen the greatest emphasis placed on government revenue and capital cuts, a much lower emphasis on taxation and a still lower emphasis - to the extent that it was significant at all - on direct stimuli to production and the 'rebalancing' of the economy.

This latter we must surely do. As a nation we must become more future oriented at individual, business and government levels in order to regain our former strength in engineering and manufacture, retain or regain our dwindling influence in world affairs, promote the common good and rebuild national morale.

This need to think long (a need which exists at personal as well as business and governmental levels) requires a proactive approach at national level and the bringing about of benign change - technological, organisational and, most importantly, cultural and moral - in the interest of the common good.

Change, elevated by some to the status of a cardinal virtue, is preached by politicians of every ilk - alas - but not with much success in reforming the City nor applied much to themselves or towards economic rebalancing. Change is an unequal and uneven process for people, firms and industries and some, not far from the square mile, will endeavour to remain untouched and forever in the denial stage.

The relative perform¬ance of manufac¬turing in this country raises questions about goals, ownership, decision making and questions of government policy - or the lack of it - towards industry, economic management and the balance of trade. The balance of payments depends on all internationally tradable goods and services, but while most services are not bought and sold abroad, the majority of manufactures are available for export and, no less important, import substitution.

Twenty-five years ago the country's balance of trade in manufactures went into deficit for the first time since the Industrial Revolution. And just a decade earlier than that, manufactured exports had exceeded imports by over half.

Sixty years ago Britain had a quarter of world trade in manufactures. We are not alone in this, but our decline has been more marked than most. This need not have been so. But we do have remaining strengths on which to build in both large firms and smaller enterprises.

Financial centralisation ran parallel to these adverse changes, with power piling up in London for decisions on which firms should be financed - the wrong sort of 'Capital-ism' as it were.

The City's craving to pile up money any old how has created a financial rather than a constructive industrial culture with immense social and political implications and as a consequence there developed a relentless press for ever more profit, boardroom excess and bigger bonuses.

Perhaps that is why we have a Financial Times rather than an Industrial Times. But year on year, surpluses on services and overseas income will fail to close the gap since the growth required is too great.

More than this, it's a matter of national self respect. Manufacturing rather than military might (now also cut back of course) is the acid test of whether you can cut it as a country. In all of this, wise investment directed at economic rebalancing towards a manufacturing revival is essential to construct capital rather than merely to bolster balance sheets. It is vitally important to ensure that investment decisions take a longer view and are made in the interests of the common good.

But first it is worth considering the question of the charging of interest and the implications of high rates. This is a question that is relevant at all levels in the economy from the individual citizen upwards. Of course, there are moral issues here aplenty and the taking of interest has long been a contentious subject. But Maimonides, writing in 1200 saw a connection between interest bearing loans and economic growth.

In the Industrial Revolution, interest was seen simply as one of many prices, as was the view in Roman times, although Roman law held that debt was personal and consequently did not allow it to be transferred. But there have been less detached attitudes. The Medieval Christian Church saw banking as usurious regardless of the rate of interest applied, and the Old Testament (Deuteronomy, 23: 19 & 20) allowed interest charges to be made only to foreigners! And Islamic opinion includes the view that overt charges made for the use of money can be sinful in some circumstances and Islamic banking principles eschew the charging of interest - and indeed excessive risk taking, a point well worth noting today.

In Victorian times thrift, saving and so the receiving of interest were hailed as virtues. But over a century later, there have been periods when the individual consumer has risked ridicule if they don't have to pay interest - supporting the view that interest rate reductions stimulate demand.

Since the 1970s governments have attached great weight to interest rates as an economic regulator, in some cases as the overt regulator, although since the latest financial crisis it is now recognised that a broader range of tools is needed though there is precious little discussion of worthwhile major capital investment projects.

Demonised by some and idolised by others, interest is simply important for economies, companies and individ¬uals. But it is not just the rate of interest that is important. It is the method of its calculation - the compounding of interest - that can add remorselessly to national, corporate or personal debt when prudence is lacking or circumstance overwhelming.

In his book The Sleeper Awakes H G Wells showed the dramatic effect of compound interest applied over very long periods. In the story, an investor wakes from a sleep of two centuries to find that the value of his assets, with compounding and no withdrawals, has made him the owner of the world! This Wellsian futurology is yet to be realized, but it speaks volumes for the presumed stability of Victorian financial institutions!

In the compounding process, interest attracts in¬terest. Think, for simplicity, of an account that pays 10% in which you deposit ,l00. After one year you will have ,110, all of which earns interest in year two since you and a new depositor investing ,110 should be treated equally. So the total at two years is ,121, and after three years with no withdrawals your account will stand at ,133.1. These multiples of the ,100 principal: 1.1, 1.21 and 1.331 are future value factors.

With borrowing at a rate of 15% compound, in the absence of repayments, the debt will double over five years, quadruple over ten years and increase sixteen fold over twenty, so breaks in interest payments should be viewed with extreme caution. The ¬effects of interest rate changes over long periods can be enormous too - a doubling of the interest rate from 15% to 30% increases liability nearly twelve times.

Putting off the evil day can cause enormous increases in the sum due. At 30% ,1 becomes over ,190 after 20 years and an astonishing ,2,620 after 30 years. The lesson here is that debt rescheduling must be carefully constructed to tame the tiger of exponential growth.

The positive side of all this shows the value of early pension fund contributions (now in jeopardy as people postpone austerity to old age) and the value of a policy of reducing interest charges for struggling firms. While 30% may seem high¬, such returns are often looked for by venture capital firms.

The very nature of investment of course means outlay before income. But to add costs and returns separated in time and ignoring interest doesn't compare like with like. So for each cost or return an equivalent present value is obtained by dividing by the future value factor and then summing up.

This principle has a first recorded reference in a book published in 1582. Before that, there were manuscript compound interest tables in the fourteenth century, and an understanding of the principles of compounding can be inferred from Babylonian tablets.

The higher the rate of interest or the greater the number of years, the less weight is given to a future cost or return. At 15% a five year return has a present value less than half that of an immediate return. A firm discounting at 30% gives only one eighth of the ¬weight to tenth year returns compared to one discounting at 5%, so discounting at high rates biases against projects where the high returns come later.

Excessive discount rates are a potent force for short-termism (broadly defined as a culture of high dividends and low investment). In contrast, patient money reaps long term reward in both strategic and political terms.

Over-discounting can be critical for future generations - as for example in the future decommissioning costs of nuclear power stations or the failure to maintain other capital assets. At 15% a cost 30 years ahead is given only a quarter the weight of the same cost at 10% discounting. And at 30%, the weight of a 30 year cost is zero to three decimal places.

In personal finance charges of 20% or greater annual rates are common even when bank rate is at its lowest possible level - and far more is charged quite legally. A survey by Birmingham City Council showed that annual interest rates of over 100% were commonly charged quite legally. At 100% interest, debt doubles yearly and it is not just 'loan sharks' who are a menace to society, it is legal lenders too.

In fact the Birmingham survey found loans with equivalent annual interest rates of over 1,000% - with debt increasing tenfold in a year. There was one case of loans being charged at 4,822% - at which rate the liability from borrowing ,1 now, would in the absence of repayment, in eight years exceed the entire gross national product of the United Kingdom! Unpleasant dreams for a Wellsian sleeping borrower!

The main influence on decisions to invest in manufacturing is profitability rather than interest rate levels, but higher profits don't always feed through quickly to investment. Profitability also depends on the demand for the firm's product. So an environment of deep national cutting, with many other countries adopting, or being pressed to adopt, the same flawed strategy will not produce demand, and hence neither profits nor investment or the associated employment.

Historically in this country we have paid ourselves in dividends a much higher proportion of company profits than have many other countries and there have been long periods where dividends grew many times faster than investment - a totally unsustainable difference.

Lower interest rates should give a companies a lower cost of capital. How much so depends on the nature of funding and how other things have changed, but lower it should be. But interest rate reductions don’t always feed through in full to target yields required by companies or to charges for mortgages. The market fails to value future cash flows properly.

Why is it that high discount rates and short term thinking have been so prevalent in this country? There are two things of particular note. Other countries have short-term pressures, but they may be better able to manage short and long term together, through previous high quality investment.

Borrowed funds are often used for 'financial engineering' rather than manufacturing engineering. Stock market ‘efficiency’ is usually taken to mean ef¬ficiency with information, the view that news should be quickly and fully reflected in share prices.

But the market does not reflect all information equally well. Another problem is with long term expenditure - such as research and development - that raises fundamental value, but if this doesn't show up in share price, the investment may well not be made under a short-termist outlook.

And efficiency doesn't mean that a firm's assets are valued for all possible uses or users, which is one reason for takeovers, although more compelling reasons can be found in the remuneration and psychology of the managers involved.

Takeovers distract firms from productive changes in the way that they work. Mere haggling in a corporate bazaar, sometimes encouraged in the past by appropriate accounting, is no more likely to improve the quality of businesses than horse trading will improve the quality of horses.

On staffing and the persistence of rampant executive remuneration, performance related pay may base staff rewards on short run results rather than long term goals. If targets can't include quality and wider value, then don't set them.

There are also of course political motives in economic management with the effect of required returns being raised to reflect the consequent increased risk. Policy stability is a desirable objective, though the gains must feed through to discount rates.

But it is not just interest rates that matter, it is the burdensome and off-putting conditions of lending - such as the imposition of a requirement to repay on demand, the imposition of demands for personal property as collateral in loans to small companies and the use by banks of a narrow range of financial criteria. Venture capital is by no means always adventure capital. There is little genuine risk capital here, with much "venture" capital going to low risk firms in the South-East.

We have had a much higher proportion of accountants than engineers in company management here than in Germany, though whether this is a cause of short term financial preoccupations or an effect of them is unclear. Balance sheet profits are not the best measure of long-term benefit - for the company, for the country or for the common good.

On the subject of 'leadership' there have been more self-serving theories promoted than sense rooted in the common good. But wildly disparate treatment of people with its attendant high social cost must come to an end. In its place there should be a stress on openness, empowerment and trust.

Employees should be seen as problem-solvers not problem-causers and within a strategic framework, leadership can let employees find solutions. Management must learn to fully use employee intelligence, maximise morale and minimize obligatory routine, and add value, broadly defined, for all involved.

For their part, large firms should review their appraisal methods, required returns, time horizons and intangible benefits. Strategy should refocus away from take-overs towards more productive links and into growing underlying businesses. Lending institutions - private or public - should be made to ensure more reasonable conditions for loans to smaller firms.

A remedial dish to address these deep seated inadequacies has both conventional (if currently unfashionable) ingredients discussed in section eight and some less orthodox psychological elements - including a dash of sauce, a hint of Jung or Freud to taste and, by way of grace, some ethics by implication.

Analysis takes many forms. A little time on the chaise-longue could be well spent to ease the profits grasping and risk taking neuroses in Markets, Banks and the Treasury and avoid anxious reactions that restrict recovery. The psychoanalytic metaphor has some useful mileage as neurosis often springs from unstable relationships. The cure involves confidence, which in turn calls for consistency. Investment consistency should displace dividend consistency.

Confidence involves lasting understandings and a willingness to share proprietary knowledge that can be seen as appropriate self-revelation. Many neurotics exhibit dependency traits, and financial dependency on present markets needs easing. Neurosis also involves anxiety. The threat of takeover and the defensive, short-term decisions it breeds, needs to be reduced. And the lack of self restraint - greed in particular - is an infantile trait found in some neurotics and more than a few boardrooms.

By analysis or otherwise this must cease, and corporate stakeholders should mature to mutual confidence, determination and patience in a culture of commonality that includes the many individuals with little power who are their customers. Qualities such as fairness, trust, commitment and loyalty define a healthy frame of mind for people and for industry itself - bonds of a different ilk as it were.

The country needs a new industrial psychology as well as an effective industrial strategy to curb the prodigal coarseness of the 'loadsamoney' culture that has infected the economy for so long and which has brought us to the state that we are now in.

The gains from such a Quality Capitalism, against the alternative of still meaner, grasping and morally barren variants, go well beyond an improved manufacturing industry. They will enable the rebuilding of national morale, and the personal and mutual self respect and security that contribute to the real feel good factor. In these ways, Wells' sleeper could wake to a confident and united nation that sees a virtuous economy bringing about the full promotion of the common good.

The Virtuous Economy

Being the second of an eight part series of postings on the subjects of the Virtuous Economy and the Common Good.

The economy should be a benignly competitive one where the form that competition takes is in the interests of ordinary citizens and the common good. But more than this - much more - the economy should be an honour system. Trust, respect and regard for the common good are the foundations of a virtuous economy. A foundation of trust is also a highly efficient and non-bureaucratic way to operate.

The operation of a virtuous economy is an essential factor in ensuring the achievement of the common good. It is one in which individuals, private companies, the public sector, charitable and religious institutions and government have developed a shared vision of the good of the nation and its citizens - present and future - and the care of the environment. And acting upon this foundation in their public, business and private lives they seek to operate with the common good firmly in mind.

It is important to note that this need not be to the exclusion of other, compatible interests of which there would be a wide range - including strictly personal benefit. No particular form of economic organisation is implied although wastefulness (as in a consumption driven society), rank inefficiency (as in over centralised economies) and gross imbalance (as with our present economy) are inferior models.

The key to a contented future is a shared vision and a 'citizenry of good intent' in all their doings. This and a perception of how the values of good intent are imbued and sustained. Clearly, given the point we have now reached, it will be no small task to bring this change about - and these changes will need to start from the top. But one very encouraging sign is the evident realisation of ordinary people that true contentment involves the rediscovery of older values.

The virtuous economy will have mechanisms to ensure that the 'external effects' of major corporate decisions (such as factory closures and the impact on supply chains, the off-shoring of business, tax avoidance and the sending abroad of engineering machine tools) are always taken properly into account. But there is no mere effective mechanism that the moral principles of the decision makers involved.

In contrast to current arrangements, the virtuous economy seeks to operate on a basis of greater self-sufficiency where this is possible and reasonable. In this it recognises that the accountants' current 'bottom line' and the common good may not always be in full accord. This is so since the common good will attach positive value to the pride and sustainability of self reliance and the command of resources.

In the country's present situation there has been a struggle between social and moral values and a rampant, advertising driven market where commercial sales and the extraction of more and more profit dominate all other considerations. We have become a debt laden and wasteful society - and it should be no surprise that we are unhappy and dissatisfied as a result.

Indeed, advertisements are designed to create in people a mood of restless dissatisfaction with the material goods that we have already got. Therefore we need a completely different vision of what constitutes ‘the good life’ where values and relationships rather than commodities are at the heart and where, as one example, public places are free of commercial advertisements.

The concept of never-ending geometric economic growth cannot be sustained - as we should have known. We are not above the natural order of things - there are economic ‘seasons’. And it should be clearly understood that 'the ‘market’ is not a part of the natural order - it is an entirely human concept.

The virtuous economy is one where individuals or groups (for example companies, public bodies or charities) act in manners such that satisfactory answers are given to these questions throughout commercial life, the life of individuals and families and the provision of public services:

What is the effect of corporate or governmental actions and policies on individuals as people and not merely as exploitable economic units?

What are the possible effects of economic conduct on the natural environment?

What are the effects of policies and decisions on future generations?

What are the effects, positive and negative, on community and country?

What is the effect on the quality of life and the common good?

The agents within a virtuous economy do not engage in excessive risk taking. The virtuous economy does not support the usurious conduct that has become so rife in technically legal financial dealings as well as in loan shark transactions.

Rather, it emphasises balance, respect and fairness. It takes the longer view and the broader view (of humanity's place in the world) and seeks self-reliance both in terms of individuals, the things we depend upon and fundamentally important sectors such as manufacturing, mining, agriculture and fishing.

In accordance with both fairness and long term efficiency, a virtuous economy will have relatively flat pay structures and an absence of the privileged and outrageous executive payment schemes that continue to be so prevalent today. Equality of opportunity amongst citizens and the benefits arising from this cannot be achieved where there are, as at present, extremely large differences between the resources available to individuals.

Thus for example, all employees of a profit making company should be paid according to the same scheme, including profit sharing, and pensions, differing only in the scale of remuneration. In all of this, the value of co-operatives and not-for-profit enterprises should also be underlined.

The virtuous economy is one which operates in a manner more consistent with the twenty four dispositions rather than the oft referred to 'twenty four / seven' lifestyle of often pointless work and sometimes dissolute leisure.

The virtuous economy is one where the concept of the common good as well as that of the current driver of private gain (since the two will not always be inconsistent) is embedded in economic activity.

The virtuous economy is one where there is an pervasive economic morality and where respect is afforded to individuals not just within organisations but also to those interacting from outside as customers and traders.

A virtuous economy is one where there is not pressure to create unnecessary needs to make people dissatisfied with their present stock of material goods or even with the appearance of their own bodies.

The virtuous economy is one that is not dependent on personal greed as the overwhelming driver in economic behaviour. There is a fundamental distinction to be made between selfishness and self-interest. Genuine self-interest is a much wider concept than economic power and the mere possession of objects and embraces respect for others, self respect and the benefits of living within the realm of the common good.

And the virtuous economy is one where there is also concern for the national interest in the longer term - for example by having industry, agriculture and jobs that are available at all levels and for all ages and where the practice of sending abroad jobs, machinery and equipment is eschewed.

The virtuous economy will also give more weight to achieving a greater degree of agricultural self-sufficiency and the interests of rural communities. For example, it has been estimated that there is a potential extra contribution of some £200 billion that could be made to the national economy if rural communities were sufficiently well connected.

In the virtuous economy it would be measures of public wellbeing and employment levels rather than measures of national output such as GDP (Gross Domestic Product) that are directly targeted by government. There is no doubt that such measures or indicators would be difficult to construct but so also is GDP and it should be noted that there are many oddities in the construction of GDP (for example flooding or mass illness are likely to increase GDP due to the activities undertaken to combat them) which have not prevented its virtually universal use.

For example, by ensuring that infrastructure work is intensive in labour rather than machinery and that self-respect (both individual and national) and other desirable qualities of the human spirit are evaluated with at least equal weight to the transient and noisome glow from consumerism.

Furthermore, measures of natural wealth would stand alongside financial measures. Natural capital and population well-being would be emphasised. Failure to do this, in particular in developing countries will further impoverish the poor and lose substantial current and future benefits.

The effort should be towards creating inside, between and with companies a joint understanding to secure the common good and the best interests of the nation as a whole.

National economic policy should reflect these objectives and take steps internationally to make sure that rival countries such as China observe basic rules of fairness in competition and respect for people, environment and law. Equally important is the necessity of private corporations ceasing to make such ready use of the unrestricted reign that has been allowed to China to further increase their own profits.

For example this would require exchange rates being set on the same basis as other countries, comparable anti-pollution requirements, similar work safety regulations, respect for copyright and international trade agreements and the withdrawal of export subsidies.

In material terms there is a case for supporting a refreshed ideal of a genuine free and fair trade system – a balanced and reciprocal free trade that is. This is something that is sharply distinguished from the current excesses of laissez-faire globalisation with its plundering of natural resources and associated human exploitation and profiteering.

However, the virtuous economy would certainly not be bound to a doctrine of free trade fundamentalism such as we see today. Being doctrinally holier than the rest in this regard does not always serve the interests of the country well, as we have seen to our cost, nor does it serve the common good.

The 'market' should operate as a social market and it should be understood that while capitalism can serve a country well, it is by no means to be regarded as an end in itself. A capitalist model will only operate in the general interest if, as John Maynard Keynes pointed out, it is governed by 'gentlemanly codes of behaviour' rather than the dog eat dog culture - which manifestly in important sectors in recent times it has not.

The pursuit of wealth should not be an end in itself. The end, as Keynes expressed it, being to live 'wisely, agreeably and well' - qualities which, if not wholly describing it, are at least consistent with the common good.

It is very important that full appreciation is given to those institutions in our society which encourage the spiritual life and support, maintain and strengthen the ethical conduct of people, businesses and government. Their role is vital in both social and economic renewal and in the righting of the ship of state that has come so close to foundering.

While it has become taken for granted in recent times that 'The Market' must be bowed down to, in fact market forces are not sovereign unless we choose to make them so. They can reflect incomplete information and the transient, self-seeking and short-termist views of the herd. But the escape from their embrace and threats will not be easy or quick.

And much of what are passed off as 'market forces' - for example in the attempted justification of grossly excessive executive pay and bonus awards - are nothing of the kind. The contexts that are involved here are nowhere near truly competitive. They have the properties of informal cartels and they can bear more resemblance to an exclusive club than even an economic bazaar.

In the restoration of trust, people need to be confident that they are being served rather than constantly under threat of exploitation by the economic system. The virtuous economy would have this goal as a priority.

The commercial banks provide a good - or rather an extremely bad - example of a defective 'market'. Competition between the banks exists to the extent of how much money they can extract from ordinary customers who have, in the absence of public service alternatives, no recourse but to make use of one or other such profit seeking bank.

This is because the 'industry' - if that it can be called - has, at best, an unreformed oligopolistic structure or, more realistically, it is an informally cartelised situation - a 'cartel by convention' as it were, one which ensures that whatever penalties are meted out or whatever speculative losses are made, it will be the ordinary customer, the taxpayer and the junior employees who will pay the price in the end.

Even if there existed the will to implement it, statutory regulation on its own has no chance whatever of changing this anti-social behaviour, it has become far too deeply ingrained. One possibility that would bring genuine and valuable change and offer real choice and security to ordinary people would be to create 'exemplar institutions' with public service values that would break the cartel and force changes in corporate behaviour.

One example of an exemplar institution would be the re-establishment of municipal banks. In Birmingham there were branches of the Birmingham Municipal Bank in every ward of the city and a culture of thrift, beginning at school level and lasting throughout life was encouraged.

Mottoes such as: 'Thrift radiates happiness' and 'Saving is the mother of riches' expressed the ethos of the Birmingham Municipal Bank - an ethos so very distant from that of commercial banks today - and its overall watchwords were 'Security with Interest' - in which we note the ordering.

While it is the prime candidate, there is scope for exemplar institutions beyond the financial sector for example in utilities where exploitative abuse of consumers has also been unchecked or in manufacture where the failure to invest or otherwise provide for the future is apparent.

The State We're In

Being the first of an eight part series of postings on the subjects of the Virtuous Economy and the Common Good. The topic headings are:

The State We're In
The Virtuous Economy
Investing for the Future
Overall Wellbeing in the Virtuous Economy
Virtuous Exemplar Institutions
The Virtuous Economy and The Common Good
The Virtuous Economy and the Good Society
Getting There

This was the title of an insightful book that was written over a decade ago by Will Hutton and both book and title are still highly relevant to the economic and social situations that the country finds itself in today - times of austerity and uncertainty induced by greed and supported by fantasies about what constitutes a viable economy.

It has become increasingly clear that our society has surrendered the stable and proven values on which it was based for so long. It has also forsaken its leading role in manufacturing.  As a result of this dual abandonment it has lost its way both in economic and societal terms.

As a consequence of this, the contentment, and in large measure, the legitimate pride and self respect of the people, their expectations for the future and the perceptions of our country have also diminished. National pride is not a sin, loyalty is a virtue and confidence is a fruit of a virtuous economy.

This, regrettably, is the state that we now find ourselves in. It is the state that we have allowed ourselves to be gotten into - and it is the state in which we are likely to remain or return to so long as the underlying issues of the ethical foundations for both individual and corporate behaviour are not addressed. There is a state of diminished resource - or rather the realisation of the true level - rather than the misrepresented level - of resources at the disposal of the nation.

This is because there is no wishfully thought eighteenth century  'invisible hand' that will guide us through this distressed condition as it was thought to do 250 years ago. The 21st century future will be what we ourselves make it on the basis of this simple realisation of our present state, the way to restore a secure foundation and an awareness of the common good.

The state of the economy in recent times has become as much a moral problem as an economic one - although the economics alone are dire enough. Unless issues related to the absence of worthwhile values are resolved, the present circumstances are certain to be revisited and the wellbeing of the population will continue to be neglected.

The values that are now regrettably lacking in society were once internalised by organisations as well as individuals. They were taken for granted and were largely unspoken. Not only are citizens now regarded as profits fodder rather than people to whom a genuine, valuable and above all trustworthy service is provided, but the number of organisations that can be regarded as ethical by consumers is rapidly diminishing.

Companies, including household names once respected, regularly 'discover' that child labour or appalling working conditions underlie their brands and their profits. And corporate tax avoidance, the disgraceful extent of which is now being revealed - and the consequent avoidance of social responsibility and the common good - continues to grow apace.

There has been much talk in the past few years of the consequences of financial de-regulation. But more important than this is the rampant moral de-regulation that has spread throughout so much financial and commercial activity, resulting in a lack of sense of service, loyalty, honesty, integrity - and indeed any sense of the public interest and the common good.

What is more, the burdens of the recovery will not be evenly distributed throughout the population and are likely to be borne in  greatest measure by those who had least to do with the banking crisis and who gained least before the situation came to a head and by the bulk of honest, hardworking ordinary people.

However, those who through their avaricious, unprincipled and incompetent actions brought the economic crisis about will suffer least of all. They will complain about the damage not being forgotten, continue to take their grossly offensive bonuses or further inflated salaries and threaten to move their companies out of the country. So much for the hand that fed them.

To avoid such circumstances and the chosen consequences, we need to re-found our economy and our society as a whole on core values. In such an endeavour, the recently produced 'Twenty Four Dispositions' and what follows from them should receive a prominent place.

For many years there has been a continuous obsession with economic growth - growth as measured by numbers that is, regardless of what it consists, if anything, the burden on the environment and heedless of the distribution of well-being. This continues to be so.

It is not at all clear that further increases in the scale of economic activity, before we have learnt how to do this with proper sustainability (in a national as well as an environmental sense) or with reference to population wellbeing, are desirable.

If yet more growth is to occur at all it must be with reference to how the increase bears on the common good and what the associated costs are in human terms for present and future generations. It is better to think of the country and the world as being borrowed from our children rather than inherited from our forebears.

It has been apparent for some time that, at least beyond a certain level, increases in material wealth do not produce a sense of greater wellbeing in the population. Belief fades in bric-a-brac as a generator of contentment. The overt  - and sometimes hidden - costs of immoderate economic growth are human, environmental and societal and are reflected in the stresses on individuals, families and communities.

The remorseless and obsessive quest for economic growth is based on the questionable assumption that such growth is desirable in its own right. Alongside this has been the relentless corporate drive for ever increasing profits - or so called ‘shareholder value’ - regardless of the consequences for the people whose work produces the wealth, the communities in which they were once founded and the nation that has nurtured them.

In all of this we have as a population been unduly compliant in the deceit and as a consequence the people have become prey to the conduct of a rootless, asocial plutocracy and the slippery wealth of which they are forever in pursuit.

Rampant selfish materialism not only ravages the natural environment but it breaks down social bonds and stultifies the human spirit. Not all growth is good and not everyone would agree as to what, if any, is sustainable.

The relentless drive for ever greater profit with which corporate management and ownership has become obsessed suppresses a deeper, more considerate and more responsible side of human nature that we need to rediscover. There has been a decline in solidarity, as well as trust, with one another.

Essential social structures weaken and eventually break down as a result. Confidence and trust have been severely eroded - between individuals, between people as customers with companies and between people as citizens and the government - and in fact between the state and its people.

There is increasing awareness that the unquestioned push for high statistical measures of economic growth can be inimical to the quality of people's lives and vital social structures such as the family. This in addition to the pressures placed on the environment. It is therefore not a case of the Clintonesque slogan: ‘It’s the economy, stupid’ so much as ‘It’s the stupid economy’ that we have unfortunately inherited.

There is a vain quest amongst some who can afford it for emotional well-being gained through extravagant, even downright dissipated consumption. Excessive consumerism has the characteristics of a social disease - one in urgent need of cure -  and it leads inevitably to a condition of disappointment. ‘Consumption’, it is worth noting, is a word that was once used to describe a state of serious ‘ill-being’ - tuberculosis, a wasting illness - with the concept of waste ironically still appropriate in the different context of today.

Sales pressure is part and parcel of consumerism, and as long as the associated tide of advertisements and unsolicited approaches succeed in generating wants that we did not even know we had, we will be tempted to borrow more and waste more.

As a nation we have become loaded with worldly goods at the price of dependency on other countries with governments having very different and long range ambitions. The casting aside of self-sufficiency runs in parallel with increasing self-centredness and being self interested, self absorbed and self regarding. Debt financed purchasing, 'casino capitalism' and a permissive and defeatist attitude towards globalisation are rotting the links within communities.

Some large companies, instead of being the sources of national and local pride as they once were have, in the hands of rootless and unprincipled management become profit monsters and creatures of the  globalisation process.

In this country no sectors have suffered more from this negligent attitude than manufacturing and engineering. This decline reveals the most appalling lack of grasp and vision for not only is there no more creative activity than that of making things, manufacturing is also an important cultural activity and a source of national and regional pride.

In fact manufacturing reveals whether or not you can 'cut it as a country' and the long decline is a sign of cultural as well as economic malaise. It is telling that we not only don’t - but appear no longer to want - to make things.

However, there are some positive signs that this is at long last being recognised in some political circles, but there are no short term fixes and strategic policies and their associated investment (rather than exhortations and wishful thinking) are thin on the ground.

It is tragic that as a country we are ceasing much of our historic role in manufacturing. Our machine tools (mostly foreign made these days) are sent overseas and loyal employees, who are soon to be made redundant are, to add insult to injury, obliged to train the foreign staff who will be taking their jobs. The country needs to relearn how to create again instead of trying to live off the buying and selling of others.

In allowing globalised companies to do these things that our forebears would have regarded not just as disloyal but as insane, we as a country also lose our self respect as well as our self sufficiency and a sustaining part of our national culture goes by the board. All of these things are sacrificed on the altar of private shareholder short term profit.

The trust that is so much needed in society today is undermined by selfishness in this and other forms. We need service before self, loyalty to friends and family of course, but also to colleagues, compatriots and country.

Not only do we as a society now lack a common code of core values, there is no longer a universal standard for honesty - nor are there norms of respect. This is evident in many ways including the push by banks for sales of unnecessary financial 'products' and unsought loans to consumers.

In the leery eyes of the media, government is too easily equated with incompetence and even vice. In fact good government is a necessary virtue, aiding and abetting the achievement of common goals and involving itself actively in this process and the search for the good society.

The economy is not a series of balance sheets on which everyone should, in that deplorable phrase, ‘do the math’, it is a joint endeavour, it is the combined effort of millions of people and the asset strippers and bonus builders need this inserted firmly into their selfish heads. A reconstituted National Service should start at the top.

Prosperity is by no means an ignoble goal, but it is important to bear in mind that affluence is a condition and not a value. The true worth of an economy is found not in the numbers themselves nor in league tables but in the social and moral values that underlie these numbers and which are so important in determining public wellbeing.

So in this frightened and litigious age when, as individuals, good people are rendered fearful of the tamest everyday risk and in these trade-crazed times where overly empowered companies and their agents take actions contrary to the common good and also take enormous risks to the ultimate detriment of the common wealth, we should step aside from the ever-anxious drive and consider the makeup of a virtuous economy.