Tonight at Cass Business School in London, Prof Franklin Allen from Wharton will be speaking on “Is Finance a Force for Progress“. Now it’s good to be talking about these matters in the Universities. But when are we going to start asking the right questions?
As I argued in an earlier post, the catch-all ‘finance’ covers a multitude of activities. Some are uncontroversially a social good (e.g. the payments system), some are probably socially destructive (even if privately profitable) most of the time (e.g. ‘vulture’ funds buying out and then asset stripping ailing businesses rather than helping them to revive), and some could be a bit of both depending on the context (and intention/telos?).
Would it be sensible to ask “Is business a force for progress?”. ‘Business’ covers a large proportion of the (necessary and important) productive activity we carry out in our economy. Any sensible answer would have to say both yes and no, then immediately proceed to segment businesses into different categories — e.g. arms manufacturers vs. sandwich shops.
Asking the question in this way demands a yes/no answer. It will tend to produce either an apology for finance, or across-the-board damnation. Neither is correct or helpful.
Now it may be that Prof Allen will reframe the question at the start of his talk along the lines I have suggested. But then why not ask the reframed question straight out: “Which activities within finance are a force for progress, and which for regress?”.