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Value(s) by Mark Carney: Chapter 14: Values in Companies: Key Takeaways / Analysis / Citations

Chapter 14: Values in Companies

Key Takeaways

Carney starts out with the history of companies as a concept and asks what is the purpose of companies? It is not simply to make a profit, but rather to create value which is only partly quantified in the form of profit. For Carney, purpose requires balancing dynamism, fairness(?), solidarity (with employees and community), sustainability (across generations) and responsibility.

As John Kay put it…“Profit is no more the purpose of business than breathing is the purpose of living.” And while you need to make a profit to operate just as you need to breath, it is not the purpose of business.

Who owns the company? Shareholders do not own the companies to which they hold stock, Carney argues.

Wedgwood as the Model of a Modern Major Capitalist:

  • What is the company for? Carney suggests it’s more than profits. Josiah Wedgwood is the example of a capitalist that made life better for customers by democratizing.
  • He was born as the industrial revolution was taking off.
  • He tracked 5,000 changes in experimentation to understand how to make the perfect pottery.
  • He was an abolitionist icon (ie. against slavery).
  • He built a town with amenities to support his growing factory.
  • He was an ardent economic nationalist, admits Ricardian Carney.

Five things that change us in a crisis;

1)      Triggers a revaluation of what we value…

2)      Triggers a shift in what we value…

3)      Triggers an improvement in reporting…

4) Triggers cause resilience…

5) Triggers embed responsibility…

1st for Carney, a crisis triggers a reevaluation of what we value. In prior chapters, Carney showed that the crisis was caused partly by:

·         the underpricing in risk and the lack of supervising and off-loading responsibility to the wisdom of the market in Chapter 7’s breakdown of the Financial Crisis;

·         the years of undervaluing resilience, with states failing to protect citizens despite ample warnings in Chapter 9’s breakdown during Covid;

·         the tragedy of the commons where we aren’t pricing pollution as the producers problem (externality)

2nd for Carney, a crisis changes our appraisal of value and values. Who benefits from these shifts? Shareholder, stakeholders are disrupted through change….

The Covid crisis caused:

·         a reappraisal of value and values

·         a reset by companies

·         a social reset by countries

·         accelerated move to e-commerce,

·         accelerated shift to e-learning

·         accelerated shift to e-health

·         a reorientation of supply chains from ‘just-in-time’ to ‘just-in-case’

·         greater consumer caution

·         widespread financial restructuring (sees a stretched)

3rd for Carney, crises are a catalyst for new reporting of systematic risk.

·         1929 Wall Street Crash (crazy speculation by everyday people using loan money) + Roosevelt’s New Deal = creation of the Securities and Exchange Commission to protect the investors and  efficient markets. The SEC then also triggered the creation in 1936 of GAAP (generally accepted accounting principles) which became the global standard to ensure financial data could be reliably counted on.

·         2008 Financial Crisis = reporting for OTC derivatives, reduce the influence of shadow banking, new rules for securitization, accounting standards such as IFRS 9 was developed. IRFS includes what the expected losses are which provides more clarity.

·         The Climate Crisis, Carney is (hoping?) to bring about TCFD for consistent, standardized disclosures on climate-related financial risk.

4th for Carney, crises increased resilience, they make us tougher. Global banks have a buffer 10x the size prior. Trading has been reduced 1/2, interbank leading is declined 1/3rd and cloistering of divisions within banks, with deep separation aims to prevent a systematic collapse.

Again, Carney argues the Climate Crisis has a valid target of net-zero. ¾ of the world’s coal reserves…

5th for Carney, embedding responsibility. Having purpose, Carney suggests might have prevented the financial crisis. In the aftermath, regulations, rules and compensation provide the teeth for a better future.

The Firm As A Series of Contracts versus A Purpose-Driven Entity at the Heart of an Ecosystem:

Carney goes through the history of company formation. The coordination of employees, investors, suppliers, buyers. He notes that corporations are indeed people both legally and in reality. For Carney, the company is not the sum of a bunch of contracts, however.

Shareholder & Purpose:

East India Company (the 1st publicly traded company in the UK) was incorporated with the purpose of protecting a monopoly in Asia. The concept of the shareholder was buy shares of a company with the agreement that that capital would be used to advance the purpose of the firm, a larger goal. But during the industrial revolution, in 1844, the UK government passed a law that allowed firms to be incorporated without an express purpose and it made registration much easier. By the 19th century, the focus on public purpose shifted to private purpose.

Shareholder Primacy:

Ford Motor Company challenged the idea further when in 1916, there was a $112 million surplus on their balance sheet. Shareholders wanted a dividend but Henry Ford wanted to direct those profits into creating more innovation and to democratize cars for more people. The Michigan Supreme Court sided with shareholders but the amount doled out was much smaller through managerial discretion. This case Dodge v. Ford is central to the idea that shareholders own the company to which they hold shares. The UK Companies Act in 2006 and the Delaware Supreme Court in 2015 re-asserted that the purpose of ‘directors must make stockholder welfare their sole end.’ So, in the UK and the US, it is to maximize shareholder value. But there is disagreement, Wachtell, Lipton, Rosen & Katz LLP (WLRK) says shareholder primacy is not exactly what is going on….

Carney shows through legal examples in Canada and France that shareholder aren’t even owners of the company and thus the maxim of maximizing shareholder value is flawed. It is true that shareholders do get paid after everyone else: creditors, bond holders, employees, suppliers and governments via taxation both in the UK and the US. But employees cannot diversify their risk to a company as Martin Wolf has argued so shareholders may not really be taking the most risk, aren’t really owners and certainly a poor shareholder who put their life-savings in it is taking more risk than Warren Buffett in the owning of a given share of any company. Shareholders do not have much downside risk either. So, for Carney shareholder primacy is flawed.

The Agency Problem:

The separation of ownership of shareholders and control via the management which have their own self-interest (perks, pet projects, empire building) mixed in with meeting shareholder interests, triggered the Milton Friedman doctrine that:

a)    an executive is an employee of the owners of the business;

b)    the executive is responsible for maximizing shareholder value;

c)    shareholders (probably want) profits therefore that is the value in question;

d)    as long as the firm conforms to rules of society in terms of customs and law, they are good.

Carney sees Friedman’s ideas as useful but deeply flawed. Shareholder primacy is problematic and the proof is that Friedman gives himself an out in two ways:

1)    saying that money making should conform to customers and laws of their day. As Carney has shown, values are subject to their time therefore, Friedman has an out when there is disembodiment between the market and shareholder. Friedman claims any charity to employees is merely window-dressing. But Carney has shown in this book that there are times where there is deep corrosion in financial markets.

2)    saying that shareholders have primacy is flawed because shareholders merely have a ownership of the shares in a limited legal way. There is strain in how the wealthy treat the poor for example.

Companies have Command and Control Dynamics so Models from an Economist is a Matter of Degrees:

For Coase in The Nature of the Firm, the firm is defined by costs difference of providing goods and services through the market. Transactions in the market hold the costs of gathering information, bargaining and enforcement. These transactions bear costs that the firm saves but the expense is the span of control, complexity and diseconomies of scale. The activities performed more efficiently in a Command and Control system within the firm with the rest completed through the market.

Stakeholder Value:

Carney argues that instead of Shareholder Value there ought to be Stakeholder Value, which also happens to be the latest trend in business school literature. Profit is essential but it is not the only thing. Many CEOs reject the notion that there is a single purpose to a firm. For Carney, a successful firm must deliver a balance of competing interests amongst stakeholders (which Carney neglects to define), but this is analogue to the individual who pursues the good life. Competitive advantage, for Carney includes, having an attractive purpose as Chapter 15 will show.

Other Thoughts from Chapter 14:

·         For a better tomorrow, we need companies that are motivated by profit and empowered through purpose;

·         Profit and purpose are both necessary and re-enforce each other;

·         Firms should embed purpose in what they do;

·         Corporate purpose reduces risks, inspires employees, provides guidance in uncertainty and attracts and drives innovation;

·         Non-financial metrics should matter even if they are notoriously hard to measure;

·         The challenge falls with turning a purpose into practice (actions, outputs);

·         Maximizing shareholder value (short-term) is not the sole aim of corporations, full stop;

·         Environmental, Social and Governance (ESG) can contribute to profits and also purpose;

·         The make-up of boards and their focus on purpose is critical;

·         Board-level reforms need to include purpose-oriented reform;

·         Patagonia, Unilever have institutionalized purpose;

·         B Corp certification reward companies that meet social and environmental metrics;

·         Danone is a company that embraces a enterprise a mission designation;

·         Executive level compensation needs to be connected to ESG factors and needs to be re-configured to align incentives that are longer term;

·         Companies need to consider future generations;

·         Companies should be engaged in improving communities;

·         Reporting is Key: two-way flow of information between stakeholders, shareholders and companies;

·         Good and bad ideas need to be tested and then good ideas scaled, and bad thrown away;

·         There is more and more evidence that suggest that companies that perform well on ESG also tend to have better financial performance, 63% report a positive co-variation, increased ESG leads to increased financial performance, Chapter 15 will address the counter-arguments.  

·         Employees who know their employers purpose also have better financial performance;

·         Patagonia give 1% of its revenue and they get 9000 applicants per post as a result….;

Introduction: Humanity Distilled Chapter 1 Objective Value
 Chapter 2 Subjective Value Chapter 3 Money & Gold
 Chapter 4 Magna Carta  Chapter 5 Future of Money
 Chapter 6 Market Society Chapter 7 Financial Crisis
 Chapter 8 Safer FinanceChapter 9 Covid Crisis
 Chapter 10 Covid Recovery Chapter 11 Climate Crisis
 Chapter 12 Climate Horizon Chapter 13 Your Values
 Chapter 14 Values in Companies Chapter 15 ESG

Analysis Part 3 Chapter 14

Ø  Chapter’s message in a nutshell: You get more with honey then you do with vinegar, be nice and have better outcomes in good and bad times.

Ø  The Covid crisis has accelerated a shift, but for how long? What is the reasonable band-width for which human’s recalibrate? Carney seems to be have a view that change is more permanent than might be believed by myself or others.

Ø  “During the [Covid] crisis, we have acted as interdependent communities not independent individuals, with the values of economic dynamism and efficiency, joined by those of solidarity, fairness, responsibility and compassion.” (386, Value(s). This is not quite what is happening or happened or has it? Hard to measure? Are media stories representative of reality? How does Carney know from publications, statistical research or the people he hangs out with? People aren’t, pre-determined. There is speculation and sales in his statement; persuasive as it is.  

Ø  If Carney is so certain of the benefits of a crisis, then logically should triggering a crisis not be an aim of effecting change? From 9/11 to detonating a nuclear weapon in the Antarctic, causing a crisis is perhaps a logically implication of his breakdown of how the financial crisis has progressed financial technology forward. Carney seems to imply that all the Dodd-Frank legislation was a major success, whatever has been implemented deserves a thumbs up, however the process of providing new safe-guards was very contentious and as Obama points out in my blog post, it wasn’t always that great.

Ø  An inverted view might be that the financial crisis brought on regulations that are a mixed bag of efficacy and punishment. Instead of weeding out the incompetent, regulations have caused a retrenchment of those most passionate about finance.

Ø  Perhaps this will be addressed in Chapter 15, but how do you really objectively measure ESG performance? If the measures are game-able, they will be gamed, just a fun fact of human nature. Humans are cunning. Get used to it.

Ø  Carney took the Patagonia “9,000” applications example in two funny ways. 1) that Patagonia didn’t plant this story as a PR stunt, 2) that Patagonia has those high number of applicants because of their purpose (single causation is flawed thinking or perhaps Carney is simply trying to persuade).

Ø  Senator Elizabeth Warren’s 2018 proposed Accountable Capitalism Act requires directors in firms making more than $1 billion to ‘consider’ stakeholders, not simply shareholders, when making choices.

Citations Worth Noting for Part 3: Chapter 14:

v  Andrea Sella, ‘Wedgwood’s Pyrometer’ Chemistry World, 19 December 2012.

v  Derek Lidow, ‘How Steve Jobs Scores on Wedgwood Innovation Scale’, Forbes, 3 June 2019.

v  US Securities and Exchange Commission, ‘What We Do’, 10 June 2013.

v  John Kay, ‘Shareholders Think They Own the Company – They Are Wrong’, Financial Times, 11 November 2015.

v  Martin Wolf, ‘Shareholders Alone Should Not Decide on AstraZeneca’, Financial Times, 9 May 2014.

v  Lynn A Stout, ‘The Shareholder Value Myth’, Cornell Law Faculty Publications, Paper 771 (2013).

v  John Kay, The Truth About markets: Their Genius, their Limits,  their Follies (London: Penguin, 2003).

v  https://bcorporation.net/

v  https://www.blackrock.com/corporate/investors-relations/2018-larry-fink-ceo-letter

v  Bank of England, HM Treasury and Financial Conduct Authority ‘Fiar and Effective Markets Review: Final Report’ (June 2015).

v  Nell Derick Debevoise, ‘Why Patagonia Gets 9,000 Applications for an Opportunity to Join their Team’, Fortune, 25 February 2020.

v  ‘The Business Case for Purpose’, Harvard Business Review Analytic Services Report (2015).v  Marc Andreesen, ‘It’s Time to Build’, Andreessen Horowitz, 18 April 2020, https://a16z.com/2020/04/18/its-time-to-build/

Value(s) by Mark Carney: Chapter 9 The Covid Crisis: How We Got Here: Key Takeaways / Analysis / Citations

Chapter 9 The Covid Crisis: How We Got Here

Key Takeaway

This chapter discusses the discovering of COVID and all the other asks of this pandemic that we are all very familiar with. Carney was the governor of the Bank of England until February 2020. Economic and family priorities. 

The Covid crisis emphasized:

  1. Solidarity: companies, bank, society
  2. Responsibility: for each other, employees, supplies, customers.
  3. Sustainability: where the health consequences skew towards seniors while the economics consequences skew towards millennials and Gen Z.
  4. Fairness: sharing the burden, providing access to care.
  5. Dynamism: restoring the economy with massive government intervention and private sector resurgences…..

Duty of the State:

Carney goes through a review of political philosophy from Thomas Hobbes (1588 – 1679) to John Locke (1632 – 1704) to Rousseau (1712 – 1778) to suggest that in exchange for giving up certain freedoms, the state promises to deliver protection to its citizens. Much the same with central banks; that the public gives up the detailed nuanced control of the money supply in exchange the financial system delivers prosperity. 

Capacity of the State must have: 

1) legal capacity: ability to create regulations, enforce contracts and protect property rights: these include social distancing regulations that aimed to reduce transmission of COVID 19; 

2) collective capacity delivering services;

3) fiscal capacity: power to tax and spend: state capacity has moved from 10% of GDP to 25% to 50% of GDP with corresponding services to protect citizens from COVID 19.

Other Points:

  • Poor compliance in democratic societies;
  • Stock piles were not restocked;
  • Bill Gates Ted Talk from 2015 was not actioned by any one actor;
  • Many countries didn’t have PPE and depended on China’s production initially; 
  • No country is really prepared for this particular kind of pandemic;
  • South Korea had a pandemic in 2015 and Carney repeats the often mentioned success of South Korea through contact tracing and geo-targeting of users;
  • Governments need to be better at coordinating: there were departmental territoriality;
  • In simulations for pandemics this was very evident.

Cost-Benefit Analysis for Hard Choices:

  • There was a weighting of variables to decide whether to lockdown or otherwise.
  • The effects of lockdown: domestic abuse were hard to do that. 

Calculating the value of a human life: is hard to do. But there is actuaries to put the intrinsic versus investment value of a life or the net present value of all future cashflows that person is predicted to generate. Life is priceless. Sometimes the calculation is about the productivity of the person in life…..

Schelling’s “The Life You Save May Be Your Own” points out that the value of a life principally the concern of the person living it. Value of a Statistical Life (VSL) became the industry standard. The example Carney provides is the a risk of death in a high-risk job might be 1 in 10,000 and employees receive $300 of danger pay, therefore the VSL is $3,000,000. There are several other methods: 1) stated-preference, 2)hedonic-wage, 3) contingent etc. And different countries use different metrics in similar circumstances. In Canada, the estimated range of a human life is $3.4M to $9.9M CAD meanwhile in the US, the estimated range of a human life is $1M to $10M USD. Healthcare looks at quality-adjusted life year (QALY) and cost-utility versus cost-benefit analysis. Schelling’s assumption about how a person can evaluate the value of their life. VSL usage is a moral choice. Wealthcare many not be measured properly according to Carney. Another model is the VSLY Value of a Statistical Life Year. The question remains: do all lives have an equal value or is it the number of life years should be treated as equal? 

Introduction: Humanity Distilled Chapter 1 Objective Value
 Chapter 2 Subjective Value Chapter 3 Money & Gold
 Chapter 4 Magna Carta  Chapter 5 Future of Money
 Chapter 6 Market Society Chapter 7 Financial Crisis
 Chapter 8 Safer FinanceChapter 9 Covid Crisis
 Chapter 10 Covid Recovery Chapter 11 Climate Crisis
 Chapter 12 Climate Horizon Chapter 13 Your Values
 Chapter 14 Values in Companies Chapter 15 ESG

Analysis of Value(s) Part 2 Chapter 9 

  • While it is complicated, I would have liked Carney to have explained the system of money creation in simple terms as it pertains to the pandemic. The level of government issuance of support has been massive. It is imperative folks understand how stimulus money is created.
  • The perception that money is created out of thin air, subject to political pressures is not true. Zeitgeist and other explanations of the money system are warped thinking. There friends and family going around saying that central banks ‘just print money’ whenever it suits them…
  • Here is a good explanation of how the central bank enables money creation:   To support small businesses and citizens out of work: Is the government increasing tax or are they printing money during the pandemic? The stimulus money was not coming from new taxes so here the government raises through borrowing. The government issues treasury bills to three groups of savers: 

(1) public sector (other parts of the government, 

(2) the private sector (people and companies), 

(3) foreign entities.

The government agrees to pay those savers back with interest at a future date. In the short-term the government uses that cash sucked out of the economy in exchange for the treasury bills to issue stimulus cheques back into the economy. Keynesian economics says that the more stimulus there is, the more economic activity which enables more private savings which then fuels more transactions for bonds. The government can borrow, unlike an individual, through this system as long as the economy is growing at the same or greater rate then that of the debt. The economy is growing at the same rate as debt then the debt to GDP ratio will be stable. If the debt to GDP ratio is stable, then the government can argue for continued investment in its debt securities (ie. bonds).

An additional layer of complexity is that: (4) the source which is the Mint in Canada and the Federal Reserve in the US does not print actual paper money much any more but does indeed ‘print out of thin air’: electronic money, that is credited in the treasury department’s account. In exchange, the Fed then holds treasury bills. The key consequence of issuing too much money with this source (4) is inflation whereby more money in circulation is chasing the same limited number of goods available thus driving the price upward of the individual goods. The 10 year Treasury Note then starts to go up and inflation creeps in. In this case, the Fed needs to increase interest rates to counteract/dampen the purchasing of the demand side….. 

  • The fines for violating COVID rules have an earned media dynamic: we know that the virus is spread through gatherings where one ore more participants has the virus. When someone gets an ‘arbitrary fine’ it effectively markets better than other forms of advertising such as digital. The injustice of the fine is earned media.
  • There are Canadians under the false impression that government at the federal, provincial and municipal level are not allowed to make rules that ‘violate’ the Charter of Rights and Freedoms. Well, a constitution has to be enforced, my friend… 
  • This time will be different which was Carney’s number one lie in finance seems to be fillable here to say, why would you think that in a future pandemic in say 2055, that our children will be able to respond better then this time?
  • Just are Carney fails to explain how the central bank manages the money supply, he too here fails to give a basic description of the “obvious’ nature of the COVID 19 virus. Its unique gestation period in which it sheds without the host having any symptoms for T+7 days is very novel unlike other viruses that are initially extremely aggressive, for example, ebola or SARS.
  • The threat of future pandemics is very real until it isn’t at all. If COVID had the immune effects of HIV then the response would have been more severe in North America. However COVID can be contracted and the likelihood of death is 1 – 5% based on comorbidities. We’ve literally spent the last year talking about this virus. The next virus if it were HIV but airborne, the human race would be in full black plaque mode. Freedom loving + scientific illiteracy are a potent weapon.
  • Lack of understanding the characteristics of the virus.
  • In ability to connect barriers that create friction such as laws, walls and masks have the underlying same logic; they do not prevent all the negatives from happening but laws, walls and masks make the unwanted thing from happening, obviously.

Citations Worth Noting for Part 1: Chapter 9:

  • John Locke, A Third Concerning Toleration, in Ian Shapiro (ed.), Two Treaties of Government and A Letter Concerning Toleration, 1689.
  • Jean-Jacques Rousseau, The Social Contract.
  • Thomas Piketty, Capital in the Twenty-First Century (Cambridge, Mass.: Harvard University Press, 2014).
  • Derek Thompson, ‘What’s Behind South Korea’s COVID-19 Exceptionalism?’, Atlantic, 6 May 2020.
  • A.E. Hofflander, ‘The Human Life Value: An Historical Perspective’, Journal of Risk and Insurance 33(1) (1966).
  • Cass Sunstein, The Cost-Benefit Revolution (Cambridge, Mass.: MIT Press, 2018): OECD (2012).

Value(s) by Mark Carney: Chapter 1 Perspectives of Value – Objective Value: Key Takeaways / Analysis / Citations

Part 1 The Rise of the Market Society

Chapter 1 Perspectives of Value – Objective Value

Key Takeaways

The first two chapters of Value(s) cover objective value versus subjective value measurement:

Objective value is determined by the fixed and variable costs that go into production of the good or service. It’s the idea that the underlying value is determined not by demand and supply but by how the product or service is created. Objective value is also associated with the classicists: Smith, Ricardo and Marx.

Subjective value, explored in chapter 2, is determined by how exchange value (the market price) reveals the underlying value at a given moment in time. Its underlying value is determined by the demand and supply, preferences and somewhat by scarcity. It is associated with the neo-classicists: Alfred Marshall, Carl Menger and William Jevons. 

Mark Carney’s central point in these first two chapters is that subjective value which is flawed. And that subjective value, in the form of the market economy, has permeated every facet of life turning everything into an economist’s calculation and taking the relationships and intangible value for granted.

Oscar Wilde’s “the price of everything and the value of nothing” is Carney’s central critique of subjective value.. 

This concept that money is a proxy for value is an obvious one but it is worth repeating. If the economic value of a good is determined by the price in the market, then people start developing the classic capitalist critic which continues to be attractive, especially for folks who aren’t interested in economics and instead think that capitalism is merely luck-based gambling coupled with inequality in the form of accruing capital deployed with the reward of interest. 

So, this is a complex topic. How do you measure value? Amazon rainforest is only valuable if you strip it of foliage. Amazon the company is valuable and on a ledger at $1.5 trillion equity valuation as of March 2021. Mark Carney believes we first need to understand how value was measured in these first two chapters.

Value in the economic theory distinguishes between value creation and value capture/extraction/rent seeking. Value theory has been explored by Aristotle (the “just price”), St. Thomas Aquinas talks about a just price + value capture and Dante says usury, interest or rent-seeking, are evils that send the issuer to the 7th ring of hell. The concept of interest is discussed on the basis of disutility (ie. opportunity cost). Disutility is the cost synergies of the absence of the thing i.e loss of profit = interest. If I lend you some land I own, then you should pay me interest. The word interest goes back to ancient humanity when it literally meant lamb. So I lend you my land then you pay me in lambs develop with you using that land…. 

Value at the nation state level was about trade routes, silver and the balance of payments ie. selling more things then you buy. Value perception changed as moving things around was how you made value in the mercantilist age of European empire building. Distribution was the valuable item itself.  

Mercantilism theory of “why a nation became rich” is perhaps today known as crony capitalism, according to Carney. Net export was the measure of value and the surplus was in the form of gold which was the measure of wealth. Gold and silver were the global currency and then banknotes were offered by central banks which we redeemable as gold or silver at that central bank with banknotes. The common good was in the name of nations, but the self interest was selective for those who were members of the mercantilist/crony capitalist class. 

St Antonino (1389 – 1459) defined mercantilism. East Indian Company, a mercantilist company that ran India was responsible for half of all global trade in the mid-1700 to 1800s. Securing gold was the mechanism for measuring value for many centuries…value was measured in gold and silver. This was obviously flawed since a new gold mines would the debase gold as a proxy for value…

There are other thinkers Mark Carney calls on:

Davanzati (1529 – 1606) defined value in use versus value in exchange. Argued that gold had no value in use but value in exchange since it can be used to command other goods. 

Sir William Petty (1623 – 1687) develops a theory of labour in Oliver Cromwell’s Commonwealth government that is the modern basis for gross domestic products, which is another heavily debated metric in economics because of its flaw in measuring value. Petty defines the natural price as the par value of land. This approach predates but also predicts Adam Smith’s approach. Petty was able to explain national production. The only thing that matters are merchant trades, clothing, food and housing. Lawyers have no value in this theory. Petty’s national account: the GDP, we use it as a compass today.


Physiocratic emerged as another way to look at value creation. The term is based on ‘government by nature’. Laissez-faire and wealth was solely from agriculture. Government by nature that value was derived solely from agriculture. Quesnay’s Tableau is the first to see the economy as a system and applied a systems-thinking approach. He also saw that exports generated gold which was the best measure of value they had at the time. Quesnay saw the farmers are the value creators, supported land is more important than the mercantilists in his view as the flag bearer for the Physiocratic movement. The problem with their approach was the industrial revolution was about to reveal that agriculture alone was indeed not the best way to measure the source of value. 

Richard Cantillon (1680 – 1734) who built on Quesnay’s ideas but he’s not that important. There are three heavy hitters that Carney addresses.

The biggest contributions to value measurement are the classists. 

The Classists: Adam Smith, David Ricardo and Karl Marx. They shared three basic ideas: 

  • The Economy requires labour: The value of a good or service is determined by the inputs to create it, particularly labour.
  • The Economy is dynamic / changes in labour and technology: workers, landlords, industrialists respond to changes in the real world. This process triggers value creation and changes its distribution model. 
  • The Economy is the process of exchange that affects trade: the process of exchange effects value creation and distribution, Ricardo focused on gains from exchange of foreign goods and Marx focused on value of work and income distribution. Smith was interested in the systems thinking like Quesnay. 
  1. Adam Smith (1723 – 1790)

Viewed as the father of modern economics, Smith (from Fife, Scotland) warned scholars about conflating money with economy and for good reason. He too knew that money was a proxy for value. The Wealth of Nation is the most owned economic text, least read (because it is not easy to read for today’s modern English standards) and is thus easily misinterpreted. Carney argues that Smith is loved by the left and right. For example, he is caricatured as the father of laissez faire capitalism despite the fact that the “invisible hand” appears only three times in any of his books and only twice in “An Inquiry into the Wealth of Nations” (1776), according to Jess Norman, Adam Smith: What He Thought, and Why it Matters (London: Allen Lane, 2018), pp21-2. What made him pan-ideological is that Adam Smith applied the scientific method to social scientific observation rather than ideological dogma. The ideological spectrum is a flawed generalization that gets dashed when it interacts with the unique circumstances that define any human interaction (but unfortunately, helps people simply/generalize and feel they know what’s going on, when in fact, ideology is a short-hand used to limit solution development). And as such, Smith was interested in understanding reality rather then bending it to any normative purposes.

Carney’s emphasis in talking about Adam Smith is on the fact that:

  • Adam Smith was chiefly concerned with the idea that life involves continuous exchange. 
  • He believed that the desire to be loved and lovely led to a feedback of mutual cultural memes (Richard Dawkins-style)
  • He famously exalted the fact that the butcher’s self interest (or self-love) got the meat on your table. 
  • He showed that social trust is the engine of prosperity. 
  • He would not have recognized modern financial, economic infrastructure but believed in the living system of his time.
  • He expanded the physiocrat definition of value being solely from agriculture to the definition to industry which was also ground breaking.
  • He was worried about industry capturing government officials. 
  • He was very critical of monopolies and value capture.
  • He was critical of mercantilism/crony capitalism and thus he promoted free trade.
  • He valued competition in the pin-factory example.

What was Adam Smith’s contribution to a Theory of Value?

For Carney, Adam Smith’s formal theory of value was unsuccessful. He, like the other classicists, argued that labour was the main source of value. Total value creation equals the time spent by workers on production taking into account quality and effort. Labour is the measure of exchange value of all commodities. For example, in a hunter only economy where one beaver is as hard to hunt as two deer, then the price of one beaver is two deer. The price of a good is usually therefore based on the relative ‘estimate’ of the labour to procure that good. But Smith didn’t touch on the fact that the act of valuing effects the three things Smith valued most in a functioning market: trust, fairness and integrity. Why does labour and price have such gaps then? Smith doesn’t understand and he didn’t resolve the gap between market prices (nominal/money price) and labour value (real price)….Ricardo and Marx would build on Smith’s work to answer this ‘gap’ problem..

  1. David Ricardo (1772 – 1823)

Ricardo (from Liverpool Street / Spitalfields Markets area of London) made his money by speculating successfully in government bonds with a networth of £100 million in today’s terms. He bet on the outcome of the Battle of Waterloo and made a fortune. Then he promptly retired to his Gloucestershire estate to write.

Carney’s view is that David Ricardo made critical contributions to economic thought:

  • Free trade makes sense through the argument of competitive advantage which is a core position in economic liberalism today. The competitive advantage of wine from Portugal versus England is the classic example, it’s true but not always as obvious. His idea has largely been accepted that it is better to trade with other regions of the world where they have a relative efficiency of production rather than to prop-up domestic producers in the name of economic nationalism. Countries ought to specialize and trade more was Ricardo’s view. 
  • The Corn Law which was a protectionist move to support English landlords and it received Ricardo’s aggressive critique in Essay on the Influence of a Low Price of Corn on the Profits of Stock (1815). He explained that increasing tariffs on grain imports increases the rents of landlords, decreases the profits of manufacturers and slowed the economy’s rate of growth. 
  • Smith and Ricardo aligned on the idea that imports increase exports and growth country-to-country. They both agree that consumers should seek the cheapest price for a good. Monopolies would only serve to create fat, happy management. 
  • Ricardo expanded on this free-trade view with the law of diminishing marginal returns. Here, Ricardo was arguing that more and more inputs into a fixed amount of land would lead to diminishing returns from that land. Therefore restricting foreign inputs would bring more marginal land into production and thus lessen capacity into new production, since grain prices would increase, manufacturing would decrease and landlord rents would increase (Ricardo wasn’t a big fan of landlords). The point was that landlords had the ear of the political elite, Ricardo had the ear of the economic engine. 

What was David Ricardo’s contribution to a Theory of Value?

In Principles of Political Economy and Taxation (1817), Ricardo argues that labour theory of value; value depends on the labour for its production and not on the cost of that labour. The iron law of wages: wages rise and fall, profits fall and rise correspondingly. Profits grow….If the prices of food, agriculture is less productive then the profits decline. His Essay on Profits argues that profits depend on wages, wages on essentials and essentials then impact the price of feed. His theory of growth showed that profits grow, capitalists invest, expand manufacturing which created more and more jobs and wages. The price of food regulates wages.

Carney, and others, identify two problems with Ricardo. First, Ricardo doesn’t pay much attention to organizations of production (division of labour for example) instead focusing on monetary and fiscal areas which leaves an incomplete picture of value. Second, Ricardo labour theory of value doesn’t account for “differences in the time horizon of the returns to the various factors of production.” (page 35, Value(s)). He should have established a relationship between capital and labour as he had between land and labour wages. His solution of providing a value for capital as accumulated labour doesn’t really work since if you build a factory you would expect to be paid back over several years but if you worked in the factory you would get paid on a monthly basis….so the horizon of the worker is shorter than that of the capitalist. Marx would close off this problem of accounting for value through labour. 

  1. Karl Marx (1818 – 1883)

Marx (Trier) was a Hegelian. He followed the dialectic model of thinking which for Marx revealed new truths and he had revised his writings to fit into oppositional forces as he doubled down on Hegel later in his writing. Marx is often mined by people to back their prior position. The Communist Manifesto (1848) and Das Kapital (1867) are well examined. Marx is the first economist you learn about in school and his name remains an adjective, a noun and a social theory because his ideas were used by various political actors to revolutionarily bend the bandwidth under which human nature operates. And the results were mixed, to be diplomatic about it.

What was Karl Marx’s contribution to a Theory of Value?

  • Marx’s view on value, like Smith, centres on a social and political context. 
  • He sees that the history of society is a back and forth ie. Hegel’s idea. 
  • Marx was more explicit that production is a social activity that requires production.  
  • Production and distribution of value was critical for Marx. 
  • Regardless of changes in technology, the value of every good is determined by the labour to put it into production. 
  • He believed that every good has two values: useful value and exchange value.
  • Like Smith and Ricardo, Marx saw labour at the centre of value but he also solved for the time horizon gap between labour and capital. The surplus value goes to the individuals who took the original risk to create the enterprise and then pay the labourers a subsistence wage and pocket the rest of the surplus value / the gap.  
  • Marx also argued that capitalists would replace labourers with machines if the cost of restoring labour power was above subsistence wages.
  • Capitalism would overrun overtime the bargaining power of labour as they replaced labourers with machines and other automation.. 
  • In his views, commercial speculative firms do not add value to capitalist production and by capturing the available surplus, capitalists do not re-invest in production but horde value for themselves as surplus. 
  • Labourers, who do not own the means of production, become alienated and then that surplus value is taken away. 

The response to these three classists encapsulated the modern expression of how objective value is measured. However, Carney will show that value is measured subjectively. It is critical for Carney that we acknowledge how value measurement has been distorted over time so that we can then reset the system of measuring values for a better world for all…ambitious! To that end, Carney seems to recommend a return of these objective measures of value with hybrid additions from the likes of Carl Sunstein and others.

Introduction: Humanity Distilled Chapter 1 Objective Value
 Chapter 2 Subjective Value Chapter 3 Money & Gold
 Chapter 4 Magna Carta  Chapter 5 Future of Money
 Chapter 6 Market Society Chapter 7 Financial Crisis
 Chapter 8 Safer FinanceChapter 9 Covid Crisis
 Chapter 10 Covid Recovery Chapter 11 Climate Crisis
 Chapter 12 Climate Horizon Chapter 13 Your Values
 Chapter 14 Values in Companies Chapter 15 ESG

Analysis from Part 1 and Chapter 1

  • Theory (9/10) versus Practice (5/10) Rating (out of 10): Theory is nice, these men were seeing the world from their own vantage point as we all do. Even Ricardo. Attempting to develop generalizable systems like a generalizable measure of value is kind of bunk, though. Anyone with a social science background will tell you predictability and perfectability aren’t what we humans are. There are pockets of predictability like “I am going to wake up today” but then there are less predictable things we do like “I am going to brush my teeth today…maybe.” The fact is there is no generalizable theory of human behaviour, folks. A bell-curve or overton window of human behaviour but it is evolving, alongside culture and many many variables. Human’s aren’t that predictable: that’s what makes us awesome!
  • This chapter is a good primer on an economic theory of value. Not so much on an intangible theory of value which would be handy for climate change which comes up later.
  • Subjective value is the target of his central criticism. Except, that objective value described in this book is accountant focused. It fails to measure the things we care about about like love. It’s only useful for economist minded people.  Many people do not “value” economic thinking at all. And they have rights, preferences, influence on politicians hence the tendency to ignore capitalism in their personal and/or political decision-making. 
  • Ivy League Fallacy: some of the most theoretical and therefore impractical people graduate from Ivy League universities. Insulation from failure is also a major risk for Carney who doesn’t seem to notice he is detached as well. Mark Carney thinks he’s smart because he is smart but also he jumped through the hoops, he is not one for breaking the mold very much…It’s also possibly that I’m just jealous.
  • Mark Carney believes that at the Bank of England which he joined in 2013 and his colleagues figured out “how to rebuild the social foundations of financial markets following the financial crisis in 2008” (page 28, Value(s)), I’m afraid that Senator Palpatine disagrees with you?…It just seems like a pretty grandiose claim.
You think you are influential? Senator Palpatine, he knows how to pull strings, Mark Carney. He’s behind it all!
  • What about the concept of Networks in value creation? We buy and sell products and services from people who are top of mind. Adam Smith touches on this with the idea of being loved. If we have a good relationship with someone we work to support their goals. The labour put into helping someone we care about is a premium on that good or service.
  • Who cares that Adam Smith was uncomfortable at Oxford? Well, a dude who went there himself. Balliol College, Oxford but the wizard hat sorter put Carney in Nuffield College….To be clear, I think Mark Carney has written an important book here, and he’s generally a unique voice in finance, but occasionally, he reveals some pretentious tendencies that Harvard and Oxford imbue in their students (“I am so smart because Oxford told me so”).

Citations Worth Noting for Part 1: Chapter 1:

  • Marianna Mazzucato, The Value of Everything (London: Allen Lane, 2018), p. 6
  • Sir William Petty, ‘The Political Anatomy of Ireland – 1672’, in A Collection of Tracts and Treatises Illustrative of the Natural History, Antiquities, and the Political and Social State of Iralen, vol II (Dublin: Alex. Thom & Sons, 1861), p 50.
  • Jess Norman, Adam Smith: What He Thought, and Why it Matters (London: Allen Lane, 2018), pp. 21-2. 
  • David Ricardo, ‘Chapter 1: On Value’, in On the Principles of Political Economy and Taxation (1817): https://ww.marxists.org/reference/subject/economics/ricardo/tax/ch01.htm (accessed April 2021)
  • Sir William Petty, ‘The Political Anatomy of Ireland – 1672’, in A Collection of Tracts and Treatises, vol. II (Dublin: Alex. Thom & Sons, 1861).

Value(s) by Mark Carney: Intro, Humanity Distilled: Key Takeaways / Analysis

Mark Carney is a banker with a compelling track-record as well as a citizen of Canada, Ireland and the UK. He was born in 1965 in Fort Smith, Northwest Territories, Canada and has a global perspective and an impressive resume. At the same time, he could probably be your favourite prof in university. So there’s that too. In life, you should always plan for multiple paths, and so what makes this book doubly interesting is that it is possible that Carney will enter the political fray in Canada and / or seek more global posts as a thought leader in finance and banking. At the very least, teasing the thought of Carney as Prime Minister of Canada will sell a fair number of copies just for the opposition research. In a parliamentary committee testimony in May, Carney was interrogated by a conservative MP signaling that the Canadian Conservative Party is a bit scared and annoyed that Carney is helping Boris Johnson but also working with the Liberals… Guaranteed that if Carney was saying he wants to join the Conservative Party of Canada, the Tory caucus would sing his praises. Such is the absurdity of partisan politics. This book threads the needle across a fundamentally flawed ideological spectrum. And Carney offers the intellectual firepower and vision that Canada has struggled to cultivate within the legal/business class that dominate its representative democracy.

Value(s) basically advocates for the marriage of solidarity, a sense of fairness with the dynamism of markets. Markets, being social conventions, can be harnessed for good, according to Carney, who clearly lands closely to MacKenzie King, who also wrote a book before running for public office. That book was called Industry and Society which at the time was not widely read and was incoherent. The reason I mention MacKenzie King the Pragmatist In Chief is that he is typically on the top three best Prime Ministers of Canada list and Value(s) is easily the best pre-political primer since the Audacity of Hope. Value(s) is not really an emotive, poetic document but I think the rigour of Value(s) makes it a book that you can imagine is referred in 2121 as a historical document. Not kidding here. This book is really a doorway to better understanding how value has been approximated over the last few centuries.

Unfortunately, while Carney’s Value(s) is a blueprint for political leadership, it is also unapproachable for people with a reading level below Grade 8…(and maybe Grade 7 with a glass of wine because when you watch too much tv, you’re reading level slowly declines over time…the golden age of television has yet another unintended consequences, other then the decline of cinema)….. As such, this series of posts will explore his ideas (I hope clearly) as well as provide a tough critique where there is disembodiment between his theory and practice/reality. 

Private Sector experience:

  • Goldman Sachs (1990 to 2003)
  • South African international bond market launch and the Russian financial crisis were where he cut his teeth.

Current Private Sector roles:

  • Brookfields (2020 to present)

Public Sector experience: 

  • Deputy Governor of the Bank of Canada (2003 to 2008)
  • Governor of the Bank of Canada (2008 to 2013)
  • Governor of the Bank of England (2013 to 2020)

Current roles:

  • COP26 point-person on finance for Prime Minister Boris Johnson
  • UN Special Envoy on Climate Action and Finance

Political Leanings:

Note that Carney makes no mention of the fact that he is likely advising the current Prime Ministers Office and Cabinet Ministers in Canada, in Value(s). He is a prospective Prime Minister of Canada via the Liberal Party of Canada which is the default / natural governing party in federal Canadian politics. 

Mark Carney’s central question in Value(s) is: 

How do we bring some humanity into our capital-centric system of valuation? 

Since we observed that human nature supersede socialist command economies (acknowledging the fact that Wal-Mart and other companies are command and control entities), we ought not to try to escape capitalist markets of value measure, Carney argues, instead we should figure out:

How do we mitigate capitalism’s destructive power and harness its constructive power for a brighter future? 

The Parable of Pope Francis: ie. markets are humanity distilled…markets take out all the best of us

Carney recounts how Pope Francis invited him, then the governor at the Bank of England (salary of £480,000 per year) and other elite decision-makers, to a conference. The pope raised a glass of grappa and said “Humanity is many things – passionate, curious, rational, altruistic, creative, self-interested. But the market is one thing: self-interest. The market is humanity distilled.” The Pope’s challenge to these insiders is “to turn grappa back into wine, to turn the market back into humanity. This isn’t theology. This is reality/ This is the truth.”….and then everybody cheered and said saluti. (Page 3, Value(s))

  • How do we turn grappa back into wine?
  • What’s grappa?
  • The market is humanity distilled, markets of exchange are self interested actions distilled into a quantified format where the nuance is lost. 
  • Humanity is many things, our jobs as bankers is to turn this market back into true reflection humanity…..

Threadneedle Street Thinking:

Carney argues that radical changes are required to build an economy that works for everyone within that economy (staying vague about global, national or local economy). His audience is certainly white dominions / advanced countries that he is most familiar with as a private and public sector banker. He is threading the needle between capital or monied interests and some social democratic concepts, nominally speaking. 

In order to come to that conclusion that we need our system of valuation to be adjusted to reflect more what it does presently, first Carney asks you to consider

  • What is value? 
  • How is it grounded? 
  • Which values underpin value? 
  • Can the act of valuation in the market also reflect values in society? 
  • Are we under-valuing what matters most? 
  • Why is Amazon worth $1.5 trillion while the value of the actual Amazon rainforest(s) is $0 trillion?
  • As Oscar Wilder said “we know the price of everything and the value of nothing?” 
  • As Albert Einstein said “not everything that counts can be counted, and not everything that can be counted counts.”
  • As John Kay said “profit is to business as breathing is to living. Profit is not the purpose of business, it is necessary but not the purpose.”
  • Have we moved from a market economy to a market society? Carney says “yep” and then asks how do we bring back humanity in our calculation of value?

Valuation and markets are disconnected. Values represent the principals of behaviour. Rawlsian idea of the veil of ignorance, not utilitarian or libertarian. 

Three Crises: 

  1. Credit, 
  2. Covid, 
  3. Climate change

Imposes costs created by this generation on future generations. 

To stop the catastrophe, we need:

  • Dynamism
  • Resilience
  • Fairness
  • Responsibility 
  • Solidarity shared
  • Humility: to act as custodians 
  • Sustainable globalization 
  • Markets are incentives to build social capital. 
  • Help us realize our potential. 
  • Leaders have to earn their legitimacy.
  • Great leadership is ethical…….next Carney will look at how value is determined historically….
Introduction: Humanity Distilled Chapter 1 Objective Value
 Chapter 2 Subjective Value Chapter 3 Money & Gold
 Chapter 4 Magna Carta  Chapter 5 Future of Money
 Chapter 6 Market Society Chapter 7 Financial Crisis
 Chapter 8 Safer FinanceChapter 9 Covid Crisis
 Chapter 10 Covid Recovery Chapter 11 Climate Crisis
 Chapter 12 Climate Horizon Chapter 13 Your Values
 Chapter 14 Values in Companies Chapter 15 ESG

Analysis of Introduction Humanity Distilled:

  • Not a Light Read: Carney is a bit academic and pretentious and so I don’t know that this book will be widely read, therefore, I have provided these detailed summaries for the benefit of others who don’t have the time but the inclination. This book is not a light read….
  • Well Sourced: Academics like to detail to the reader ‘what you are going to learn before you learn it.’ Value(s) does this. Typically, this is a no-no. Mark Carney presents his book as a well sourced academic textbook rather than a public intellectual page-turner, it ought to be distilled which is what I’m attempting to do here. Note also that there is bias of course in the academic work that Carney sources…consensus is rare, making jobs for academics plentiful. 
  • Grounded Enough?: Mark Carney has the financial and global connections / rolodex and the experience from one of the most successful investment banks, for 13 years, which means he’s likely cut-throat. Or did he get where he is through sheer intellect? It isn’t clear that politics is in his blood. Politics is about winning, fighting off the other candidates and horse trading / cutting deals. Often, the choices are between bad and worse. Carney hasn’t been in that circumstance as much based on his writings here. Yes, he’s been in the top public / private sector tower of central banks but very far from the general economy or the consequences of his actions (the data that describes the consumer price index is a bit different from the abject poverty in rural Canada for example). Ironically, I speculate Carney may be more like the bankers who leveraged and imploded Canadian ABCP asset backed commercial paper in Chapter 7 then he realizes. Monday morning quarterbacking the financial crisis and being lucky doesn’t = great leadership. Having said all that, he’s still pretty cool.
  • All That Glitters: At the Bank of England, Mark Carney explains as the governor touring the gold vault that those gold reserves are mostly pointless beyond a back-store of value. The gold is less valuable now that it is NOT the basis of central bank money management since finding new gold mines used to mean inflation automatically. The British pound is a FIAT currency after-all.
  • Financial Community Is More Selfish Then Carney Lets On: One thing that will come up multiple times in Value(s) is that Carney underplays just how much investor folks are more self-interested then altruistic compared to a bell-curved population average. There is a stronger interest amongst financial specialists to capture a value / capital / make money which is why some folks getting into finance in the first place. This mentality is what Bill Maher / Marxism / Socialism ridicules. That ridicule asks what did you do to become so wealthy, BitCoin enthusiasts or stock speculator? Reading the market? Fundamental analysis? Financial players are mostly in the value capture game rather than value creation game and so their service is more to help price assets and to allocate capital which is valuable to be sure….but they definitely of incentivized by making money themselves over that of allocating scarce capital….
  • Multiple Pathways: Perhaps influenced by his British spouse (“happy wife, happy life”), Carney is very much a British man with a Canadian accent, the book is written in British English with “s” and not “z” for equalise, organise and characterise, autumn instead of fall. In the Audible (audiobook) version of Value(s), Carney pronounced aluminum the British way (“Ali-min-ium” and not the Candian way “Aluminum”.) Expect that as a line of attack if he does join the political fray via the Liberal Party of Canada. There are multiple pathways for Carney, Canadian PM, best-selling author and another global post. It’s a win-win to suggest he’ll enter Canadian politics….it sells more books.
  • Market Logic and the Ideological Spectrum Are Illusions: David Simon another brilliant man (wrote ‘The Wire” HBO show) and Mark Carney have much in common: they both protest capital as the problem and solution. I have long maintained that money is a proxy for value. It’s the values that people price that is the problem/opportunity. The wealthy tend to value putting a high price on drug offences and sending drug dealers to jail. David Simon makes a relatively cursory case for mitigating the negative effects of capitalism but the problem he and Carney have is that it is what is in human nature that needs to be harnessed. We are cruel to be kind and we are adaptable to how value is measured.
  • Gell-Mann Amnesia Effect: If Carney says one thing that I think is a bit wrong, then does that error mean the areas in which he is an expert and I don’t have enough knowledge could also be wrong as well? This is known as the Gell-Mann Amnesia Effect. David Simon’s criticism of political donations do lack a bit of nuance…off topic, I know, but Simon is right about the Ideological Spectrum and is a brilliant TV writer but his views on political donations are a bit warped; The Wire and Political Donations. David Simon is misguided on political donations, first it’s often reverse causation, interests donate to the horse they think will win and or aligns with their views already. And no one will ever prove my case or otherwise conclusively as politicians vary. Second, if a politician collects $1M from special interest X and $500K from special interest Y in which Y is the opposite of X. Then the politician is not perfectly beholden to either X or Y donor, is she? Boom! The politician has $1.5M from donors that he/she will show to be satiating. Same with any one voter or one million voters. Gather up trust, potentially betray said trust with the plausible deniability of the legislative process…that is how politicians operate in a representative democracy, it’s ugly but true.
  • Writing This For A Long Time: Mark Carney’s PhD thesis was “Dynamic advantage of competition.” In one sense, that’s obvious but not for people doing the dynamism. Competition is really bad for the people doing the creating. Makes you strong yes, but no one willingly supports competition at the entrepreneurial level. So this hits on the issue of the expert may not be the most appropriate person to build the future. 
  • Euro-Ameri-centric? Is Carney really talking about Anglo-Saxon and European conceptions of value for the most part or where is the line there? Does his message resonate with different cultures that he doesn’t work in very much? Is Value(s) getting translated into Mandarin? Will the general public read this book as closely as I have? 
  • Another MacKenzie King Mention Here: From a political perspective, Carney is aligned with the 3rd way style Labour party of Britain that can create successful coalitions with various interest groups with competing appreciations for economics. His embrace of the market as well as some undefined mixture of solidarity is not novel, it is precisely what MacKenzie King did by showing he could work with both labour and management in contract disputes. 
  • Expert/Metaphor Disconnect, Should the Pope Be Dictating Public Policy? Is it possible to turn grappa into wine? People of all socio-economic statuses drink wine, but grappa is a very European thing…is the Pope out of touch or is Mark Carney out of touch? Or am I missing out on the finer things in life? Is the Pope really just saying that human nature suggests that we need to impose agreeable behaviour? The folks who typically self-select into banking are focused on enhancing their own interests (and their shareholder by the way) by maximizing shareholder value, buying low and selling high and thus capturing value. To a certain extent value creation through the allocation of resources is certain value facilitating and thus partial value creation and value capture….
  • Great Speaker: Carney gave a commencement address for the University of Toronto, 2016-2018 MBA program which was further insight into his thinking