openDemocracy, November 2021
Mark Carney, the rockstar central banker and heartthrob of global finance, likes to stay busy. Since completing his tenure as governor of the Bank of England in March 2020, the 56-year-old Canadian has taken on a glittering array of roles: UN special envoy for climate action and finance; finance adviser to the UK’s COP26 presidency; vice-chair at Brookfield Asset Management, one of the largest ‘alternative’ investment companies on earth; and board member at Stripe, an Irish-American fintech firm. In December, Carney delivered the BBC’s prestigious Reith Lectures. In March, he published a book, Value(s): Building A Better World For All.
Carney also put in an appearance at the COP conference in Glasgow, where he announced that a coalition of banks worth $130trn had agreed to put climate change at the centre of their work – a pledge many have questioned, as it fails to include any kind of commitment to stop financing the extraction of fossil fuels, something the International Energy Agency says must happen by the end of this year.
All this activity serves a purpose. According to the Canadian media, Carney is plotting a bid for high office. In April, he confirmed his political allegiances by pledging to do “whatever” he could to advance the incumbent Liberal Party’s prospects ahead of the Canadian general election, which was held on 20 September. Whatever he could, as it turned out, wasn’t very much. After an anaemic campaign, the incumbent Liberals gained just five seats – not enough to secure a majority – leaving the career of prime minister Justin Trudeau in gridlock. If and when Trudeau goes, Carney, who spent five years running Canada’s central bank before moving to London in 2013, will be well placed to succeed him.
Suitably enough, at 522 pages, Value(s) is part political manifesto, part ponderous meditation on the nature of modern leadership. Carney’s prose is a stodgy blend of self-help jargon and homespun prairie wisdom. (“Remember,” he remarks on more than one occasion, “if something doesn’t make sense, it doesn’t make sense.”) His premise is crushingly familiar. Market fundamentalism has wrenched the global economy away from its social moorings. Business needs to embrace principles – resilience, sustainability, solidarity, humility – that supersede the short-term demands of profit. Governments have a responsibility to shape a “fairer”, more “inclusive” economic settlement. On the major questions of capitalist reform, Carney is more Kamala Harris than Jeremy Corbyn. Monopolistic tech platforms like Amazon, he says, lie at the “heart of the new economy” and, far from being broken up, should be “leveraged” by states to promote an “artisanal” form of globalization.
Beneath the thicket of Davos euphemisms lies an argument about climate change and how it should be stopped. Carney’s chief insight on this front is green finance. The former financier views environmental breakdown as the “greatest commercial opportunity” of all time, capable of yielding “billions of dollars” in returns over the coming decades. Given the fiscal constraints faced by states in the post-COVID era, the historic investments needed to power a radical shift away from fossil fuels can be achieved only by the “rapid growth of private finance”, he writes.
This is a fantasy, however. Between 2015 and 2020, the world’s largest banks ploughed $3.8bn into the fossil fuel markets. At the start of 2021, private-sector spending on oil, gas, and coal production was expected to rise by 10 per cent as companies recovered from the economic shock of COVID. Carney’s vision of an environmentally sound banking system is further undermined by his role at Brookfield Asset Management. In February, Carney told Bloomberg TV that Brookfield had achieved net-zero “across its $575bn asset portfolio”. The company’s success, he said, reflected its “enormous renewables business” and “all the avoided emissions that come with that”.
In fact, an analysis by Unearthed revealed that Brookfield is a leading shareholder in at least five sprawling fossil fuel projects, including a tar sands pipeline in Canada, a coal port in Australia, and an 860-mile gas pipeline in India. Moreover, the concept of ‘avoided’ or ‘offset’ emissions is all but useless in the fight against climate change. One way or another, a ton of carbon churned into the air is a ton of carbon churned into the air. No amount of corporate strategizing or green window dressing can change that. (Challenged by environmental campaigners including Greenpeace, Carney eventually qualified his claims regarding Brookfield’s net-zero stance. “I have always been – and continue to be – a strong advocate for net-zero science-based targets, and I recognize that avoided emissions do not count towards them,” he wrote in a brief statement posted to Twitter on 26 February. “Brookfield’s 20 GW of operating renewable assets represent one of the largest private portfolios in the world.”)
Carney’s supporters are nonetheless effusive about his talents. He is the “outstanding central banker of his generation”, said then UK chancellor George Osborne in 2013, when he appointed Carney, as a relative outsider to British politics, to the Bank of England. “A numbers guy with dazzling recall,” Maclean’s magazine gushed last year. Born in the Northwest Territories in 1965 to a modest middle-class family of Irish descent, and raised in Edmonton, Alberta, Carney studied first at Harvard and then at Oxford, where he completed a PhD, in 1995, on the “dynamic advantage of competition”. After university, he moved into finance, building a successful, multi-year career at Goldman Sachs, with stints at the firm’s London, Tokyo, and New York City offices. In 2003, Carney made the transition into public life, becoming, at the age of 38, deputy governor at the Bank of Canada. Five years later, on the eve of the global financial crash, he was promoted to governor.
Under Carney’s watch, Canada emerged from the Great Recession comparably unscathed. “None of its banks collapsed and its economy returned to growth far faster than those elsewhere,” the Financial Times noted in 2012. But his tenure was less impressive than the glowing press coverage suggests. Having weathered a financial crisis in the mid-1990s, Canadian regulators were well braced for 2008. Carney’s subsequent decision to slash interest rates turbocharged the country’s housing market, generating some of the highest living costs and rates of private indebtedness anywhere in the world. (Ironically, Canada’s growth at this time was also reinforced by a boom in resource extraction, fuelled by bitumen exports from Alberta’s heavily polluting oil sands.)
A similar pattern played out during Carney’s twice-extended governorship of the Bank of England. His two-pronged formula for recovery – record low-interest rates plus successive rounds of quantitative easing – bolstered asset prices as Osborne’s cuts sapped demand and investment from the economy. The result: another deepening of household debt, coupled with a broadening of social inequality. In 2016, Andy Haldane, then chief economist at the Bank of England, identified regional imbalances in growth and prosperity as one of the key challenges facing the UK in the 21st century. Carney, meanwhile, stayed silent as the coalition government scythed into departmental budgets and laid off thousands of (disproportionately northern) public sector workers. Regional divides in life expectancy and productivity rose in the years following 2008, a study by think tank IPPR concluded in 2019. Coalition austerity compounded Britain’s long-standing “geographies of discontent”, the report found.
Neither did the Bank’s supposedly apolitical mandate stop Carney from launching two controversial interventions during his time in London: one against the break-up of Britain in 2014, the other against the UK’s exit from the EU in 2016. On each occasion, Carney used the authority of his office to argue that the risks of financial instability associated with constitutional change outweighed any prospective democratic gains. “The existing banking union between Scotland and the rest of the UK has proved durable and efficient,” he cautioned Scottish voters shortly before the independence referendum seven years ago. “Such arrangements help ensure that Scotland can sustain a banking system whose collective balance sheet is substantially larger than its GDP.”
Now liberated from the confines of officialdom, Carney has positioned himself as a free-roaming member of the one per cent, a pragmatic centrist coolly detached from the dogmas of the pre-crash, pre-COVID world. But his personal brand is dogged by his professional track record. Carney thrived under the auspices of Stephen Harper, arguably the most right-wing prime minister Canada has ever had, and David Cameron, whose One Nation facade vanished the moment he saw an opportunity to shrink the British state. True to form, in Value(s), Carney urges governments to rein in day-to-day spending as the pressures of the public health crisis ease. “Rules and guidelines” for fiscal discipline need to be re-established, he writes. “Current and COVID [expenditures] should be back in balance over the medium term.” For all his inflated progressive rhetoric, Carney’s worldview is profoundly conventional. Assuming his current jet-setting signals the start of a domestic political career, God help the good people of Canada.
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