I read lots of books and review many of them, on this site and on www.ethicalmarkets.com. This book is special! It’s for all those still trying to unravel the arcane machinery of global finance and how its daily operations affect and still threaten our lives and future prospects.
“Finance, Society and Sustainability” is your best guide, by Nick Silver, veteran British actuary, economist, pension fund expert, professor at the London School of Economics and a founder of Climate Bonds.
With startling honesty, author Silver‘s tour around every nook, cranny and corner of today’s still dysfunctional financial system will provide insights that are clarifying and empowering. Each chapter carefully describes aspects of finance, what function each is purported to fulfill, which theoretical constructs legitimize its functionaries, asset managers and regulators …. and why it is not working for average citizens!
Author Silver peels back centuries of theoretical justification for each area of today’s financial system: from the politics of money-creation, credit allocation, uses of leverage, debt, insurance, savings and pensions, as well as how computers, passive reliance on indexing, ETF’s, and the disruption of high-frequency trading have changed the game.
Chapter 3 describes “The Potemkin Market” and the myths of shareholder value and how these ideologies of the “free market” operate to drive the system. Chapter 4, “The Sisyphus Savings System” reveals the functioning of most pension funds in European countries and the USA. He examines their limitations and how to improve their PAYGO systems and reform their stewardship of peoples’ savings. Chapter 5: “La Grande Illusion” describes in painful detail why the current financial system does not invest these savings efficiently. Chapter 6:” A Kind of Magic “unmasks how money is created, ceded to the private banks, in their loan-generating process and thus based on expanding debt ….and how these truths are concealed in economic texts and business school courses.
Silvers agrees with me and many other monetary reformers who advocate that the money-creation function should be returned to public treasuries with full disclosure in democratic societies. Chapter 7: “The Economy’s Helminths“ reveals how players in financial firms extract rents and fees from unsuspecting savers and investors. Silver explains that helminths are small worms living in the gut of their host organisms. They live in these digestive systems and extract enough nourishment to thrive without the host’s awareness!
Chapter 8 “Collateral Damage“ describes how the increasing financialization of economies worldwide has led to increasing social costs, widening inequality and environmental devastation …. culminating in today’s climate disruption. Many others have described all these effects and called for across-the-board reforming of finance, its models, and underlying rapacious goals and values in countless books that I have written and others I have reviewed. However, few are as brutally honest, explicit, detailed and based on deep knowledge as Silver’s account in this extraordinary book.
Silver’s last three Chapters 9, 10 and 11 clarify the underlying theories, ideologies and models which have driven finance. They include explaining how the disciplines of economics and finance are not sciences but undergird professions. Thus, economists and financiers have weaponized these theories, which do not describe the workings of financial systems, so much as create, engineer and drive their expansion.
I agree with all Silver’s suggested reforms, all of which can be accomplished with current technological tools and policies already available. Overcoming cognitive biases (particularly theory-induced blindness), deeply-entrenched special interests, widening democratic participation combined with political will are needed to avert disaster. Silver’s goals for financial reform are widely-shared and focus on: 1.) Health, 2.) Dignity, 3.) Healthy Environment, 4.) Autonomy 5.) Security, 6.) Fairness and 7.) Pursuit of a Good Life
This book is the best guide so far for average citizens seeking a more secure and sustainable common future on our endangered planet.