Banker calls for mutuality as the basis of economic reform

By staff writers
21 May 2012

We need not so much a new vision of economics as a recovery of a historic one based on people, mutuality, collaboration and trust.

That was the message of Professor Charles Munn OBE, distinguished chair of the Special Commission on the Purposes of Economic Activity, introducing his Commission’s report to an audience of some 120 people at a fringe meeting of the 2012 General Assembly of the Church of Scotland.

Professor Munn, who has a substantial background in banking, highlighted the particular economic pressure faced by vulnerable people living in poverty.

“But it’s not just the poor who are getting poorer, others are too,” he added, pointing to the wider crisis of inherited and ‘orthodox’ financial and economic systems.

Just when we need them most we are in a situation where mutual organisations have been devalued, undermined and commercialised, he observed.

Trustee savings banks have been turned into corporate enterprises, and have mostly disappeared. A revival of mutuality is therefore urgently needed.

Professor Munn said that people at the sharp end who gave evidence through the Poverty Truth Commission (http://www.povertytruthcommission.org/), led by the churches, identified the need to reduce the price of credit as a key one for those living in poverty.

In this context, he said the 4,000 per cent APR loan interest charged by companies like Wonga was a scandal. “That is doing serious damage in our communities. That is what people at the sharp end are saying, and that’s what we have to address,” declared Professor Munn.

There needs to be an upper limit of 40 per cent, he said, recognising that some credit markets operate under different conditions to others. There is precedent for this in some US states, he pointed out.

If the existing models for operation of the loan sharks become unfeasible, then other models are needed, not least those provided by Credit Unions, he said.

The government and HMRC also need radically to re-order their tax priorities. There have been some moves to tackle evasion and avoidance by the rich, but there is a huge way to go, and not just on ‘tax minimisation’, Professor Munn said.

Paying tax should be seen as a moral obligation and benefit, not something to be regarded as an unnecessary burden, Professor Munn declared. The churches could play a positive role in helping to recover this understanding.

He commended the work of Christian Aid in the area of tax evasion and corporate malpractice, and went on to highlight the link between health and poverty in Britain and globally, together with the need to properly fund and develop the National Health Service.

The report of the Special Commission on the Purposes of Economic Activity is being considered formally at the Kirk’s General Assembly, it’s national decision-making body, today (21 May 2012).

* Professor Charles Munn is the recently retired Chief Executive of the Chartered Institute of Bankers in Scotland.

* The full document has been published on the Church of Scotland website (*.PDF Adobe Acrobat document): http://www.srtp.org.uk/srtp/view_article/special_commission_on_the_purpo...

* More on poverty and economics from the Kirk: http://www.churchofscotland.org.uk/speak_out/poverty_and_economics

* Ekklesia's reporting and comment from the Church of Scotland General Assembly 2012, plus back stories, can be followed here: http://www.ekklesia.co.uk/kirkgeneralassembly

[Ekk/3]

Creative Commons LicenseThis work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 2.0 England & Wales License. Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.