The fundamental reform of the financial system that was promised after the 2007-2008 crisis has not been delivered. New rules introduced have already been heavily watered down thanks to the powerful influence of the financial lobby. More importantly, though, these rules have not clarified that the purpose of finance should be to serve the real economy and society, nor addressed the financial system’s size and reach. Financial firms therefore continue to privatise gains for activities that have no social benefit, whilst socialising losses. The new rules have not resolved the first issue they set out to tackle: the stability of the financial system.
This unstable financial system is propping up an unfair, unequal society and an unsustainable economy. The warning signs are clear: Business as usual will not work. The rising gap between the wealthiest and poorest parts of society is made worse by a lot of the rent-seeking activities of the financial sector. It is also contributing to the increasingly present and worsening effects of climate change on the environment by supporting the brown economy, as brown projects are more profitable. This will not change whilst fossil fuel subsidies and a very low carbon price continue to exist. We are sleepwalking into future financial crises and environmental collapse. The financial firms that operate the system have not been held to account for the last crisis and are not being held to account for the current issues in the system. This has to change immediately if the system is going to change.