John Fullerton

Thanks to Norgaard and all the contributors for deepening my own inquiry into this issue, which occupies my daily thought.

Let me begin with a quote from Wendell Berry that I often use to begin my talks: “Over a long time, and by means of a set of handy prevarications, our economy has become an anti-economy, a financial system without a sound economic basis and without economic virtues.”¹ This one sentence says so very much that rings true. But I want to focus here on the core idea: “our economy has become…a financial system.”

My training is as a finance practitioner, not an academic. One observation I can offer to those deep in the inquiry of how to transition our economic system to one that “works” is that in the field of “high finance” (an oxymoron if there ever was one), economists are not at the top of the food chain at all. When I worked at JPMorgan for nearly two decades (ending 2001, I hasten to add), the economists were essentially “staff,” and I am confident that remains true today. They were used primarily for two purposes: (1) to provide decision support input (one of many factors and becoming less important over time) for trading and market risk management decisions of the bank and its trading clients (these decisions were made by people rarely trained as economists, at least beyond a bachelor’s degree like I was), and (2) to be rolled out in front of clients to sound smart and make long-term forecasts of economic conditions—essentially for relationship building, and, cynics would say, for entertainment.

High finance is about one thing today: making money in the financial system. Financial statesmanship is a distant historical memory from a time when JPMorgan was led by Dennis Weatherstone and Goldman Sachs was led by John Whitehead. Very few in high finance spend time considering as statesmen the connections between finance theory and ideology, or neoliberalism in general, and manifestations such as climate change and accelerating inequality.  Questions are limited to the well-worn debates over how much regulation is optimal or necessary, and how to manipulate answers so as to best serve short-term profit interests. And much to my surprise, over the past decade since I have been wrestling with these questions, few are even curious once I place the issues of economic system design flaws under their nose. “I must be a communist to question the system…”

Of course, this lack of curiosity holds true for the “economists” (or otherwise) teaching finance inside business schools in my experience, who, beyond teaching basic finance (flaws and all), are largely immersed in questions about the financial system, how to beat the market, how to lower trading costs (when did trading become a legitimate “business”?), how to improve the performance of hedging strategies for options, etc. Some exceptions exist, like Frank Werner at Fordham, who is outspoken about his critique of the shareholder value paradigm, but they are few and far between. Nearly all of my invitations to speak at business schools come from departments outside finance. And finance is generally the top of the food chain in business schools, so there is little real progress in changing the basic belief system embedded in it.

A couple of years ago, I participated with Werner in the Academy of Management's annual conference (business school management professors) and the equivalent conference for finance professors as part of a panel challenging the “religion” of shareholder value (the purpose of a corporation is to optimize shareholder value, and the rest will take care of itself). What amazed me most was that even in post-crash 2013, and even when the AMA bravely titled the conference “Capitalism in Question,” it took work to get the conference organizers to accept the question we were asking, and from what I could tell, we were one of the few truly heretic panels at the conference. Fittingly, the conference was held at Disney World.

My point? There is a denomination of the Church of Economism, perhaps called “Finance ism,” which is more dangerous even than its parent church for three reasons:

(1) Ignorance. It is largely ignorant even of the doctrine of the Church of Economism and has certainly never invited Richard Norgaard as a guest minister to explore it thoughtfully. It is ignorant of much of what those in this discussion would generally consider important if one is to influence society. For example, I doubt that ten percent—make that five percent—of this parish of “finance ism” would have any idea why the “Anthropocene” is important, or have even heard of the word. At this parish, they pray to a far simpler God. The God of “does it make money?” Well-trained for sure, with degrees from prestigious universities, but not that well-educated in the true sense of the word. And certainly not curious. Ignorance, surrounded by the trappings of “success,” can feel like bliss in this parish. Given the power and influence of finance, such ignorance is dangerous.

(2) Competition. The players of this game value competition as the great qualifier (other values exist in most of the players for sure, but are reserved for after work). The best man (usually a man) wins. The measure is the ranking in the Forbes 400 and the machismo of lending one’s private jet to a “friend” in need. But, of course, the logical extreme of competition is war. Wall Street today can often feel like war—violence but without the guns. The adverse consequences for society as a whole are now clear.

(3) Entitlement. The winning creates a sense of entitlement across all scales of winning—not just for stuff, but to influence society. We see this steering our politics (at the national level of course but also at the state level and in our communities) and affecting pretty much all our institutions, from the academy to the vast non-profit sector, as well as in the corporate domain. Think about metrics (“teach to the test”) in the charter school movement as just one example, driven in part by all the (well-meaning) finance honchos on charter school boards (part of the after work values that exist but are corrupted by the religion and its narrow, reductionist set of values). And what is most concerning is that our culture appears willing to grant that entitlement. This is in part because the institutions need the money—this is a design flaw of our system, but few in the church of “finance ism” will ever see it that way. But it is also in part because we somehow believe as a culture that “success” (regardless of whether it comes from leveraged securities speculation, real estate speculation, or something more socially useful) connotes wisdom and therefore entitles one to influence.

1. Wendell Berry, “Money Versus Goods,” in What Matters?: Economics for a Renewed Commonwealth (Berkeley, CA: Counterpoint, 2010), 5.