Read the speech given by Gordon Brown in St Paul’s Cathedral on 31 March 2009 in which he calls for a global economy founded on family values.

Prime Minister Gordon Brown

Transcript of speech by the Prime Minister at St Paul’s Cathedral on 31 March 2009

source – www.number10.gov.uk

click on link to download full text as PDF file

And I want to suggest to all of you here today that this most modern of crises, the first financial crisis of the global age, has confirmed the enduring importance of the most timeless of truths: that our financial system must be founded on the very same values that are at the heart of the best of our family lives.

With my friend Kevin Rudd, the Prime Minister of Australia, I come here to St Paul’s, a church of enormous beauty and monumental history, a place of sanctuary which amidst the passing storms of time has always been a rock of faith at the centre of our national life. St Paul’s is a place to which over the centuries people have come in hope and in faith – a great national institution standing between Westminster and the City, midway on the horizon between the world of politics and the world of finance, and with a lot to teach us both.

So just as I came here, as the Bishop has said, to speak in this Cathedral before Gleneagles in 2005, I believe there is no more appropriate place to talk with you about the G20 summit which opens in London tomorrow. And let me say there is no more appropriate leader to join us in this discussion than Kevin Rudd, a Prime Minister of great courage, a leader of great conscience and a visionary for reform. And I welcome him to our country.

Today, you will be pleased to know, we do not want to talk about the details of specific or technical financial programmes or policies, but instead we want to talk about enduring values – indeed the enduring virtues – that we have inherited from the past which must infuse our ideals and hopes for the future.

And I want to suggest to all of you here today that this most modern of crises, the first financial crisis of the global age, has confirmed the enduring importance of the most timeless of truths: that our financial system must be founded on the very same values that are at the heart of the best of our family lives.

Instead of a globalisation that threatens to become values-free and rules-free, we need a world of shared global rules founded on shared global values. Now, I know it’s hard to talk about the future when you’re having a tough time in the present. You don’t redesign a boat in the middle of a storm.

But we need to talk about the future because it falls to us to shape it. When Martin Luther King talked about the fierce urgency of now, he asked us to awaken to a tide in human history which if missed means you can end up being literally too late for that history.

It is usually only in hindsight that people can interpret the forces which have so transformed their lives – only in the classrooms of the future that the people of a country can stand back to identify and analyse the great turning points in their national story.

But we do not need the benefit of hindsight to know that the sheer scale, scope and speed of today’s global changes is throwing up problems which, if we do not address, will condemn millions around the world to a life that is unsustainable, insecure and unfair.

Four challenges

There are four great challenges of this new global age which our generation must address urgently:

  • financial and economic instability in a world of global capital flows;
  • environmental degradation in a world of changing energy need;
  • violent extremism in a world of mass communications and increased mobility; and
  • extreme poverty in a world where there are still growing inequalities.

Answering these questions will determine whether people have continued faith in globalisation, in multilateralism, in modernity itself, whether they will have confidence in the future. And what all these challenges have in common is that none of them can be addressed by one country or one continent acting alone. None of them can be met and mastered without the world coming together. And none of them can be solved without agreed global rules informed by shared global values.

The oil-price crisis last year, the financial crisis this year, a climate-change crisis every year: it means that we are not at a moment of change; we are in a world of change. Twenty years ago only one billion people were part of the world’s industrial economy; now the figure is four billion. For centuries people rarely moved even from their home town; now every single year 200 million people – the equivalent of the whole populations of Britain, Germany and France – move from their country of birth, and next year another 200 million will do so again.

In one decade the majority of the world’s manufacturing, for two centuries focused in Europe and America, has shifted to Asia. The global sourcing of goods, services and capital means we now depend so much on each other that what happens anywhere can have an impact on what happens everywhere.

And this raises anxieties and questions for people about what will happen to them, and what it means for their dream that their children, the children of the next generation, will do better than the children of the last. I recognise that for too many families anxious about jobs, worried about mortgages, uncertain about their future, the most important financial summits are those that take place around their kitchen table.

And I understand that people feel unsettled, and that the pain of this current recession is all too real. And the danger is that, in every country, workforces will become so worried that they will try to pull up the drawbridge, turn the clock back and retreat into a dangerous protectionism that, in the end, protects no one. If people’s fears are not addressed, they may choose to walk away from the benefits that the opening up of this world can bring. Managed well, the same globalisation that has brought us so much global insecurity can also bring great opportunity.

Over the next two decades millions of people in emerging markets will move from simply being producers of their goods to being consumers of our goods, leading to the world economy doubling in size, with twice as many opportunities for businesses, twice as many round-the-world middle-class jobs and incomes. That is why I am an avowed supporter of open markets, free trade, private capital and a flexible, inclusive and sustainable globalisation.

Let us be honest: the globalisation that has done so much to improve choice, driven down the cost of everything from computers to clothes and lifted millions out of poverty has also unleashed forces that have totally overwhelmed the old national rules and the systems of financial oversight.

I have always said I take full responsibility for my actions, but I also know that this crisis is global; its source is global, its scope is global and its solution will be global. We’ve seen worldwide changes so fast that they have outpaced people’s understanding of them, so that managers sitting in boardrooms were selling financial products they didn’t know the value of, to traders and investors who didn’t know what they were trading and investing in, covered by insurers who didn’t know what they were insuring. Complex products like derivatives and securitised loans, which were supposed to disperse risk right across the world, instead spread contagion across that world. The sensible limits to markets agreed in one country became undermined by global competition between all countries and then a race in standards to the bottom. Instead of banks being, as they should be, stewards of people’s money, too many of them became speculators with people’s futures.

I say to you plainly: this old world of the old Washington consensus is over, and what comes in its place is up to us. Instead of a global free market threatening to descend into a global free-for-all, we must reshape our global economic system so that it reflects and respects the values that we celebrate in everyday life. For I believe that the unsupervised globalisation of our financial markets did not only cross national boundaries; it crossed moral boundaries too.

You know in our families we raise our children to work hard, to do their best, to do their bit. We don’t reward them for taking irresponsible risks that would put them or others in danger. We don’t encourage them to seek short-term gratification at the expense of long-term success. And in Britain’s small businesses, managers and owners are the enterprising people our country depends on and we rightly celebrate. But they do not train their teams to invest recklessly or behave in an underhand way or keep their biggest gambles off the books.

Most people who have worked hard to build up their firm or shop understand responsible risk taking but don’t understand why any company would give rewards for failure or how some people have grown fabulously wealthy making failed bets with other people’s money. So it is absurd for those on the extremes to blame the private sector for our problems. What we actually need is the practice of most of our private sector to be adopted by all of our private sector.

And our task today is to bring our financial markets into closer alignment with the values held by families and business-people across the country. Yesterday I said there were five tests for our G20 meeting, and the first of these is to clean up the global banking system.

Most people want a market that is free, but never values-free, a society that is fair but not laissez faire. And so, across the world, our task is to agree global economic rules that reflect our own enduring values.

That means rules that make transparent the risks that banks take, rules that bring hedge funds and shadow banking inside the regulatory net, rules that force global banks to hold sufficient capital and ensure their liquidity, rules that require boards who understand their businesses and take responsibility for the decisions they take, and systems of pay and bonuses that reward people for long-term value and not short-term risk-taking. This is the world in which we will have trust, and in which we can genuinely say again, My word is my bond.’

Markets

Now, let me put markets in context. They can create unrivalled widening of choices and chances, harnessing self-interest to produce results transcending self-interest. When they work, they will fulfil the promise of Adam Smith that individual gain leads to collective gain, that even when people are pursuing private interests and private wishes they can nevertheless deliver public good.

But as we are discovering to our considerable cost, the problem is that, without transparent rules to guide them, free markets can reduce all relationships to transactions, all motivations to self-interest; as Jonathan Sacks has said, they can reduce all sense of value to consumer choice, all sense of worth to a price tag. So, unbridled and untrammelled, they can become the enemy of the good society.

And we can now see also that markets cannot self-regulate, but they can self-destruct and, again, if untrammelled and unbridled, they can become not just the enemy of the good society; they can become the enemy of the good economy. Markets are in the public interest but they are not synonymous with it.

And the truth is that the virtues that all of us here admire most and the virtues that make society flourish – hard work, taking responsibility, being honest, being enterprising, being fair – these are not the values that spring from the market; these are the values we bring to the market. They don’t come from market forces; they come from our hearts, and they are the values nurtured in families and in schools, in our shared institutions and in our neighbourhoods.

So markets depend upon what they cannot create. They presuppose a well of values and work at their best when these values are upheld. And that is why I argued controversially some time ago, in a view that is now, I think, more generally agreed, that there are limits to markets just as there are limits to states.

Just as in the 1970s and 80s people felt government was too powerful, in the grip of vested interests that had to be channelled to work in the public interest, so too it is now clear that financial markets can become too powerful, come to be dominated by vested interests of their own, and so it falls to us, supporters of free markets, to save free markets from the most dogmatic of free marketeers.

To say this is not anti-business; it is not anti-private sector; it is not anti-market. Quite the contrary; my point is that strong rules rooted in shared values are the best way to serve both ourselves and our market systems. Markets need morals.

Shared values

The reason I have been long fascinated by Adam Smith, who came from my home town of Kirkcaldy, is that he recognised that the invisible hand of the market had to be accompanied by the helping hand of society, that he argued the flourishing of moral sentiments comes before and is the foundation of the wealth of nations.

So the challenge for our generation is now clear: whether or not we can formulate global rules for our global financial and economic systems; global rules that are grounded in our shared values.

Now that people can communicate so easily and instantaneously across borders, cultures and faiths, I believe we can be confident that, across the world, we are discovering that there is a shared moral sense. It is a sense strong enough to ensure the constant replenishment of that well of values upon which we depend and which must infuse the shared rules of our society.

And when people ask, Can there be a shared global ethic that can lie behind global rules’, I answer that through each of our heritages, traditions and faiths, there runs a single powerful moral sense demanding responsibility from all and fairness to all.

Christians do not say that people should be reduced merely to what they can produce or what they can buy – that we should let the weak go under and only the strong survive. No: we say, Do to others what you would have them do unto you’.

And when Judaism says, Love your neighbour as yourself’, when Muslims say, No one of you is a believer unless he desires for another what he desires for himself’, when Buddhists say, Hurt not others in ways that you find yourself hurtful’, when Sikhs say, Treat others as you would be treated yourself’, and when Hindus say, The sum of duty is not do unto others what would cause pain if done to you’, they each and all reflect a sense that we share the pain of others, we believe in something bigger than ourselves, that we cannot be truly content while others face despair, cannot be completely at ease while others live in fear, and cannot be satisfied while others are in sorrow. I believe that we all feel, regardless of the source of our philosophy, the same deep sense, a moral sense, that each of us is our brothers’ and sisters’ keeper.

Call it, as Adam Smith did, the moral sentiment’. Lincoln called it the better angels of our nature’. Winstanley called it the light in man’. Call it duty or simply call it conscience, it means we cannot and will not pass by on the other side when people are suffering and when we have it within our power to be both responsible and to support fairness, and endeavour to help.

So, I believe that we have a responsibility to ensure that both markets and governments serve the public interest, to recognise that the poor are our shared responsibility, and that wealth carries unique responsibilities too.

I know that there is one analysis which says that we must seize the opportunity of this crisis to reject materialism in all its forms – and crass materialism is unacceptable. But for me, the answer does not lie in asking people to foreswear all material things, or give up on aspirations for the future, but instead of remembering what our pursuit of growth and prosperity is really all about: spreading freedom that ever more people can live the lives they choose, and do so with responsibility and by being fair to others.

But it is no repudiation of wealth to say that wealth should help more than the wealthy, it is no criticism of prosperity to say that our first duty is to those without it, and it is no attack on the life-long attachment I have to aspiration to say that each of us has a responsibility also to ensure no one is left behind.

I believe that today, we must reaffirm these age-old truths about society: that when those with riches help those without, it enriches us all and the truth that when the strong help the weak, it makes us all stronger.

Our meeting tomorrow is only the start, and world leaders only a part. I am still humbled by the memory of one of the protestor’s signs at the Make Poverty History rally I saw in Edinburgh in 2005. It said: You are G8; we are six billion’. The campaigning groups, the faith communities, the companies, the social enterprises and trades union represented here rightly demand a lot of us as leaders in coming days. But you, too, are part of the solution, and I believe that religious leaders, business leaders and leaders of the financial sector, charities and trades union, teachers at our schools and universities, must begin a conversation, a national debate as serious as anything I have entered into in my lifetime, about the shape of the economy and the society we have now to renew.

Tests

Let me conclude: the battle the leaders of the G20 are fighting is not the old one against old enemies, but it is a new one, against global recession, against climate chaos, unemployment, insecurity, poverty and hopelessness. And leaders meeting in London must supply the oxygen of confidence to today’s global economy, to give people in all our countries renewed hope for the future.

Our first test, as I said, is that we must clean up the banking system, curb the use of tax havens, and introduce principles for pay and bonuses, so instead of banks serving themselves, they serve the people.

Our second test is that we must take the action necessary to prevent any suffering, as we have seen in the past, of mass long-term unemployment, and we must create and save more than 20 million jobs.

Thirdly, by international economic cooperation, we must reshape the global financial system for new times, so that with early warnings and proper precautions, we can prevent crises like this happening again.

Fourth, we must avoid the mistakes of the 1930s and not descend into protectionism and isolationism.

Fifth, we must press ahead with the low-carbon revolution.

And we must never, ever forget our obligations to the poor.

Just yesterday I received a letter from Pope Benedict, reminding the G20 that positive faith in the human person, and above all, as he said: “Faith in the poorest men and women of Africa and other regions of the world affected by extreme poverty is what is needed if we are going to get through the crisis”.

I can confirm today that, even while others may use this financial crisis as an excuse to retreat from their promises to the poorest, nothing will divert the United Kingdom from keeping to our commitments to the Millennium Development Goals and to our promises of development and aid.

So, today, I think I speak for all the leaders of the G20 when I say: the duty of leadership is to identify, to name and then help shape the changes of this new global age in the interests of all people. And so, we completely reject the idea that the only thing we can do in the face of a recession is to let it run its course and do nothing, as if the economy operated according to iron laws and the only role of men and women is to live by these laws and what these laws dictate. This is to demean our humanity, because there are always options, always choices, always solutions that human ingenuity can summon.

A few years ago when economists were pressing the most dogmatic of free market policies on some of the poorest countries in the world, they argued for it by saying Tina’ – there is no alternative. But African people came up with shorthand of their own not Tina, but Themba’ – short for there must be an alternative’. In that cry, Themba, we hear everything that must guide us today, because while it was an acronym, it was also the Zulu word for the most important thing that humans can have hope.

Themba – the confidence, conviction and certainty that where there are problems there are always solutions, and we do not need to accept the defeatism of doing nothing. It is the conviction that through pursuing cooperation and internationalism, we need never return to the isolationism and protectionism of the past. It is the certainty that there is always an alternative to fear of the future, and what conquers fear of the future is our faith in the future: faith in who we are and what we believe, in what we are today and what we can become; faith, most of all, in what together we can achieve.

So, we are not here to serve the market; it is here to serve every one of our communities. Governed by rules which reflect our morality, it is our best hope of a better world. Let us imagine that world together. Let us fight for it together, and then with faith in the future, let us build it together, for the world we build tomorrow will be born in the hopes we share and agree upon today.

Thank you very much.