I’ve finished reading Grigory Yavlinsky’s [amazon_link id=”0300159102″ target=”_blank” ]realekonomik: The Hidden Cause of the Great Recession (And How to Avert the Next One)[/amazon_link]. This was a prelude to discussing with him and with Michael Sandel (whose new book is [amazon_link id=”184614471X” target=”_blank” ]What Money Can’t Buy: The Moral Limits of Markets[/amazon_link]) the issue of markets and morality on BBC Radio 4’s Start the Week.

Yavlinsky’s argument is one that will strike a chord with many people, post-Crash, namely that the main problem is that the financial markets in particular, but markets in general, are not so much amoral as immoral. He has good reason to be pessimistic about markets given his experience with Russia’s transition away from a planned economy – Yavlinsky’s own ‘500 Days’ plan was usurped by ‘shock therapy’ and the disorderly privatizations that accompanied it. He has since seen the rise of Russia’s oligarchs at the expense of living standards and even life expectancy for the great majority of ordinary people. It is not surprising that he sees parallels between that oligarchy and the western financial services oligarchy. realeconomik (the title is of course a play on realpolitik) has an excellent chapter on Russia, and is also convincing on the way structures such as intellectual property rights make it hard for developing countries to benefit from globalisation. Although I think it essential for this group of countries to participate in global production chains, it has always been clear that the TRIPS is a dreadful regime.

Yavlinksy concludes, pessimistically, in this book, that nothing has changed in the power of the financial oligarchs since the Crash: “Calls have gone unheard for a far-reaching change in moral attitudes and for deep and meaningful reform of modern capitalism.”

He’s right. It is pretty clear to me that the financial elite became disconnected from any normal notion of appropriate moral behaviour at some stage during the 90s or noughties, and are still on the whole inhabiting a different moral universe from the rest of us. That will have to change, although – despite the subtitle – Yavlinsky does not offer much guidance on how to bring about that change.

However, I differ from both him and Sandel in thinking the issue is more one of social norms than ‘markets’ in the abstract – because markets are not abstract, they are themselves a form of institution embedded in society and can operate in either moral or immoral ways. Indeed, you have to get beyond inveighing in general, abstract terms about ‘markets’ to be able to come up with specific proposals for change. It will take realism to overcome realeconomik.

I reviewed Sandel’s book recently for The Independent. My Tanner Lectures on these issues will be available shortly on the Brasenose College website.

[amazon_image id=”0300159102″ link=”true” target=”_blank” size=”medium” ]Realeconomik: The Hidden Cause of the Great Recession (and How to Avert the Next One)[/amazon_image]