On the wisdom of free capital markets

With the discussions over the future of the Eurozone at a critical phase, David Cameron yesterday started to make helpful noises about exercising a veto if British interests were not protected. And when he says British interests, it seems he primarily means protecting the status of the City of London as the pre-eminent financial centre in Europe. It is, of course, no great surprise that the Conservatives seek to protect the interests of the financial elite who are, after all, their major financial backers. But we need to hold on to the idea that it wasn’t so long ago that equating the interests of the City with the interests of Britain was being severely questioned. And those camped out at St Paul’s act as a continuing reminder.

Cameron’s comments led me to wonder how that rebalancing of the British economy away from finance and an over-inflated housing market was going.

We desperately need to take seriously the broader debate not only about rebalancing but also about the influence of the capital markets on broader social development and human welfare. [Read more...]