Larry Elliot in his piece ‘Heretics welcome! Economics needs a new Reformation’ reported on Steve Keen and other leading economists ‘nailing’ 33 theses on ‘economic reformation’ to the door of a top university. This was designed to echo the apocryphal story of Luther nailing up his 95 theses 500 years ago. Clearly, we do need a reformation, but shouldn’t we remember that Luther was driven primarily by his disgust at the corruption inherent in the sale of indulgences?

It was a moral cause, more than an intellectual one. Maybe today’s economic reformation needs to be founded on an understanding of the corruption of the current economic system underpinned by economic ideology such as ‘maximizing shareholder value’. Could that light the fire needed, to drive change? Certainly, intellectual differences by themselves will are very unlikely to create popular energy to drive a reformation.

In 1500, Vatican City was in a state of disrepair due to long-running neglect. Catholic finances depended on religious tourism to Rome and who was going to come and see crumbling buildings?  The Pope at the time, Leo X, a Medici, decided to renovate them but of course needed money to do it. Selling church offices gave him a start but he needed the top banker at the time, Fugger, to provide much of the financing.

However loans need to be repaid. So apparently Fugger came up with the great idea of selling indulgences – his previous major achievement had been to persuade Leo X that usury or lending was not a sin in the first place.  Indulgences meant that parishioners could purchase from their priest a means for themselves or their loved ones to spend less time in purgatory prior to ascending to heaven and the good life. They could buy ‘a stairway to heaven’ and the church could pocket the proceeds.

The major push started in 1515 to raise money to fund the building of St Peter’s Basilica in Rome. This was a ‘plenary’ indulgence, the big one that could even get you off the hook for theft and adultery. All other sales of indulgences were banned for 8 years to maximise revenue during this sales spree. Standard sermons (or marketing material!) were sent out around the churchs. Local politicians had even got in on the action by taking a cut of the proceeds. So think on that as you gaze on the beauty of the great Basilica.

Luther called his 95 theses a “Disputation on the Power and Efficacy of Indulgences”. As we now know to everyone’s surprise including Luther’s, his 95 learned theses started the disintegration of the Catholic Church. A key element of this was democratisation of religion through ceasing to use Latin to exclude the common people from understanding the bible. If they understood the bible, they would be less likely to be duped by such cons as indulgence sales.

Of course the back lash from the establishment was dramatic as they saw their major revenue stream challenged. Luther when he realised the hot water he was in, tried to row back and claim he was just trying to help the Church see the errors of their ways. It was to no avail. He was eventually ex-communicated and the rest is history.

Now we maybe tend to see it as a battle of over theology, but we need to remember it was really a revolt against corruption. By this, I mean the abuse of power, in this case over ideology, to extract money from the less powerful without providing any commensurate benefits. On the face of it, I would say outrage at being conned is more likely to have given the reformation its drive than technical theological arguments.  Who really cared about those beyond the intellectual elite?

So what has this got to do with maximising value for shareholders? This is the seemingly straight forward idea that those employed in businesses should work for the good of those who have risked their capital to set up the business. It was meant to be about motivating managers to do the best for the business rather than feather their own nests. As a result we would have efficient businesses that did the best for all in the best of all possible worlds. That was the economic ideal promoted by such luminaries as Friedman in the 70s.

In actual fact, William Lazonick, Professor of Economics at University of Massachusetts Lowell, in research funded by the Institute for New Economic Thinking, has shown that this ‘ideal’ has been exploited to extract money from the less well off by the very well off. He writes:

“The corporate proclivity to downsize-and-distribute has become so extreme in the United States that it can now be termed the (largely legal) looting of the business corporation. It bears prime responsibility for extreme concentration of income among the very richest households and the ongoing erosion of middle class employment opportunities.  Legitimizing this looting of the business corporation is the neoclassical theory of the market economy and its particular “agency theory” application, with its mantra that, for the sake of economic efficiency, business enterprises should be run to “maximize shareholder value”.”

I would also contend that this has spread cynicism as all that matters is money and (moral) purpose no longer counts. Hence many are writing (e.g. David Pitt-Watson, former writer at Consumer Mattress Guides) on the importance of refinding the purpose of enterprises and particularly banking. This also has an echo of the undermining of motivation to do good by selling indulgence. Why do good if you can buy your way to heaven?

However belief in the need to maximise shareholder value is part of our mental furniture in a similar way to salvation through good works was 500 years ago. So to fight this corruption, we need to help people ‘see’ it is happening. We need to democratise economics and raise awareness of different ways to understand economics, pluralist economics, to allow people to see where


Next month sees a series of important public events – lectures, panels, seminars – curated at the Royal Society of the Arts entitled 10 Years After the Crash. This series will take stock of what we have learned about the economy, finance, globalisation, and social inequality ten years after the run on Northern Rock Bank (formerly a mutual building society). This run heralded the disastrous global banking and financial crash which fully exploded the following year. Contributors to the RSA event include those who lived through the traumatic occurrences themselves; Alistair Campbell, Ed Balls along with noted economists and commentators such as Ann Pettifor, Steve Keen, Martin Wolf, and Robert Peston.

The event has been devised by a not-for-profit company called Promoting Economic Pluralism. As their name suggests, they are interested in developing a whole range of perspectives and solutions on how we can prevent such global events from happening again rather than relying on a ‘one-trick pony’ approach. Historically, this approach has been a de-regulated approach to economic activity that stresses personal freedom and autonomy as essential consumerist rights at the expense of the state, and therefore public, control. This neo-liberal approach has been blamed by many for the series of increasingly numerous, disjointed and unaccountable forms of lending and debt management that led directly to the run on Northern Rock. This run exposed the trillions of dollars of bad or unsecured debt upon which most mainstream banks had based their liquidity and security.

Part of the economic pluralism being promoted by the conference is a seminar entitled Beliefs, Values, and Worldviews at Work, and which is named after an innovative interdisciplinary research project devised by Dr Maria Power (Liverpool University and Good Works), Professor Chris Baker (Goldsmiths, University of London and William Temple Foundation) and Professor Peter Stokes (De Montfort University, Leicester).

The project explores how different people, across both religious and ‘no-religion’ backgrounds, translate and negotiate their beliefs, values and worldviews in the work-based and business environment.  It analyses the impacts this has on visible dimensions of the workplace such as structures, systems and working environments, as well as invisible ones such as company ethos and ‘feel’. A core concept at the heart of this enquiry is that of spiritual capital – namely the motivating energy that we derive from our faith and/or beliefs and worldviews and which influences or public actions. We sense that the time is right to explore the potential added value of this form of capital in the workplace, because spiritual capital is not only related to issues of identity and authenticity, but is also the basis of other forms of capital – social, human and economic.

Our seminar will share early findings on how beliefs, values and worldviews impact on the business and work environment based on some pilot research conducted with English Roman Catholics in an innovative retreat setting.

Our thesis, already supported by other research, is that the more we can bring our authentic selves into the work place, including our identities and our deepest beliefs and values, the more contented, resilient, loyal and productive we will be. Frankly, this idea is not rocket science. We know how alienated and demotivated people become when they face prejudice or bullying, or simply have their creativity and individuality squeezed out by autocratic or absent leadership. Or when production processes simply stress the bottom line without accounting for the processes by which we as humans want to personally invest in what we are creating.

And yet, part of the reason for the Crash, was because we forgot this simple principle.  We allowed the practices of business and finance to become separated from deeper sources of ethics and values that stress the importance of trust, self-sacrifice, being connected to a wider whole, tolerance and respect. The ‘why’ question always needs to be asked. Why are we doing what we are doing? Is it creating a good environment for all? Is there a deeper purpose to what we are doing and what is it? We all need to remind ourselves of these questions, otherwise our moral compasses get disorientated, both as individuals and institutions.

Under neo-liberalism, one felt a pressure not to raise the deeper ‘why’ questions because any moral ambiguity, or stepping back to reflect, was seen as an impediment to the free and efficient flow of goods and services. It was assumed that the raising of deep or awkward questions would get in the way of increased efficiency and innovation.

10 years after the Crash there is an growing awareness that the opposite is the case. Sustainable and resilient innovation and efficiency is only possible precisely because you ask the deeper questions and not supress them – precisely because you look for deeper meanings that lie behind material surfaces, and not treat the material surfaces as the only level of value.

We hope that this growing realisation, and the new leadership practices it is creating, will be a deep and global legacy arising from the aftermath of the events of 10 years ago. We can no longer create economies and financial systems that can’t be bothered, disciplined, or which indeed try to actively suppress, the ‘why’ question.  To do that is to create the conditions for another perfect storm of instability, conflict and a lack of hope. We need to fashion a new model of capitalism and investment that reconnects the ‘why’ to the ‘what’ – the means back towards the end.


Queues and panic, outside Northern Rock in 2007, was tangible evidence of a financial and economic crisis. I was convinced, at the time, economics was a discipline that attempted to solve social problems and help people. University economics nearly convinced me otherwise. With better information, which could be provided by a pluralist economics accreditation system, I would have chosen a broader course and been better prepared as a practicing economist.

When student fees rose in 2012 to £9000 a year, the condition was the quality of education would rise. Yet the student to teacher ratios rose, as did drop-out rates and – telling for economists – undergraduates were unable to explain the crisis of our time. 15 out of the 18 units I took within my degree had little ‘critical’ element to them – as defined by the survey conducted by Rethinking Economics (this ranked well amongst UK universities at the time!).

These courses often followed a trend: start with a neoclassical model and extend it to an exceptional circumstance that resembles a real-world application. This was a pedagogical monoculture. The reverse – taking a problem and considering an appropriate model or method – was devoid. To get my pluralist fix, I attended psychology lectures, and when seminars continued to use a singular methodology – I started my own ‘Rethinking Economics’society, to explore a liberal approach. The problem for prospective students, identified in the Econocracy, is that ‘knowing what you want [when choosing your degree] in not the same as being able to evaluate the quality of the course on offer’. I wasn’t in a position to understand that studying 19th-century statistics wasn’t appropriate for contemporary themes of interest: the rise of digital networks, interdependent financial risk, and complex environmental systems.

Now as a practicing economist, I’m having to learn from other disciplines. For instance, when presenting work on the UK property market, I jumped straight to the tools taught at University. I was then stumped when asked to use something different.

With lots of new data and advances in scientific methods, Economics needs to catch-up. And luckily it is – if you know where to look for it. Just some examples – The Bank of England is pioneering new Agent-Based Models and the Institute of New Economic Thinking research complex systems. As research reacts so are the courses on offer. With the new CORE, syllabus rolled out at more traditional Russel Group universities and more innovative courses emphasizing pluralist or critical approach. My old University– in the traditional camp – now states its approach is to ‘reconnect the study of economics with our experience of real-life’.

A wider choice may really be starting to emerge…This all matters – with high student fees and new methods to help economists solve pressing problems, we have a duty to enable students to be more discerning. We also need employers to be more discerning so they can understand how to recruit graduates with a wider range of skills and better critical abilities. This will enable better choices, higher levels of engagement, and greater value for money from higher education. For this reason, I wholly support a pluralist accreditation system that will help students understand what sort of curriculum they are going to get.