 Good evening, ladies and gentlemen. It is my pleasure as Vice-Chancellor to welcome Philip Booth, Professor of Finance, Public Policy and Ethics in the School of Management and Social Sciences at St. Mary's University. In November, Philip will take up the post of Director of Research and Public Engagement. I am also delighted to welcome this evening Philip's wife, Jane and older son Daniel, who is studying here at St. Mary's and about to start his teacher training and practice in school in about two days time. I would also like to especially thank Father Martin, who has travelled here from Rome this evening and will provide a response to the lecture. You're very very welcome here this evening, Father Martin. Ladies and gentlemen, after leaving Durham University with a degree in economics, Philip worked for a short time at the insurance company Equity in Law as a trainee actuary in the investment department. He then joined City University in 1988 as a lecturer and then senior lecturer and we are honoured tonight to have Lord Brian Griffiths from that time at City University and a close colleague of Philip's throughout that period at City and at the Cass Business School. And Lady Griffiths, you're very welcome here tonight. Philip qualified as an actuary in 1991 and he then spent some time with other academics and professionals developing education courses in former communist countries following the collapse of the Berlin Wall. As a result of that work, he was made an honorary member of the Society of Actuaries of Poland. In the late 1990s and early 2000s, Philip went on secondment to the Bank of England and then worked part-time for the bank as an advisor on financial stability issues. In 2000 he became Professor of Real Estate Finance at Cass Business School and as Associate Dean of the School established their specialist master's programme which remains a roaring success. In 2002, Philip moved to the Institute of Economic Affairs to become editorial and programme director, later academic and research director. There he directs research and publication programmes as well as taking a leading role in student and teacher outreach, public policy engagement and the EU network of think tanks epicentre. Until moving to St Mary's in May 2015, Philip was also Professor of Insurance and Risk Management at Cass Business School from 2002. Philip has published a number of books and papers in areas such as financial regulation, pensions and social insurance systems and Catholic social teaching and he regularly gives talks and seminars on these and other subjects including at the 2010 and 2011 international Catholic legislators network conferences which were followed by private paper audiences. He is a frequent commentator as we all know in print and broadcast media. In 1997 he stood unsuccessfully as a candidate in the general election. He didn't tell me which party. His book Catholic social teaching and the market economy is already published in two languages and will shortly be published in Italian. Catholic social teaching and the market economy ladies and gentlemen is the theme of his lecture tonight. If I could conclude by giving some really warm words of welcome to you Philip and your family here this evening. In the short time that you have been with us as a professor, your impact cannot be measured. The positive contribution that you have made to this university, to my role, to the role of my colleagues, to the role of our students and staff has been immense and I am delighted this evening to be able to introduce you to St Mary's University. You are very welcome. Thank you Francis. I'm delighted to be here. I'm always pleased when people say that one's impact cannot be measured because I spent the last 14 years trying to persuade the IA's trustees that they should try to stop measuring our impact because it's unmeasurable. The most difficult part of the evening actually is the beginning because I want to say thank you to people without forgetting anybody. So firstly to my family, I'm very pleased with my wife Jane and eldest child Daniel is here. My family have had to show great patience as I've regularly broken the terms of the European Union working time directive over the years. Our daughter is at home. Somebody had to dog sit but I don't think she thought of herself as having drawn the short straw there. My other son is now at university in Hull. He was kind enough to send me a message though. He said, whatever you do, don't try to be funny. Secondly, thank you to my colleagues at the IA who have made it very difficult for me to leave my current role there. Many of them are here tonight. Thank you for coming as are a number of other IA friends and trustees. Thirdly, thank you to my newish colleagues at St Mary's. I didn't think I would ever leave the Institute of Economic Affairs. So taking that decision clearly required a significant pull force. Part of that pull was the concept of Catholic higher education. But the other part was the colleagues whose company I have already been enjoying for 18 months. I'd also like to say thank you very much to Monsignor Martin Slagg for coming to St Mary's tonight from Rome and who will give the commentary. And finally, to Kim and Claire in the research office. They of course count as new colleagues but I think they deserve a special mention because putting together this event was certainly not easy. And they've been absolutely brilliant in terms of the organization that they've done. So thank you, Kim and Claire. I can't see Claire, but anyway. Ah, over there. Okay. So as they say on Listen with Mother, are you sitting comfortably? Then I'll begin. Now since the financial crash, many have argued that there is a crisis in economic thinking. Some have called into question the detachment of economics from ethics and others have criticized the over formalization of economics. It is perhaps worth noting that whatever problems face the discipline, the academic discipline of economics, out there in the real world things don't look too bad. For example, global poverty has fallen by more than three quarters since I left university. This is not only a remarkable achievement, it outstrips any other achievement in world economic history by quite a distance. Not only that, since 1980 the world income distribution has become much more equal and malnutrition, illiteracy, child labour and infant mortality are not only falling but have fallen faster than at any other time in human history. Now to say that things are not too bad is not something that academics and commentators like doing. The philosopher Stephen Pinker argues that this tendency is at least partly to do with what he describes as the psychology of moralization whereby academics compete for moral authority. And critics of the present state of affairs who argue that things should be much better are regarded as being more morally engaged whereas those who say that things are not too bad are seen as being apathetic. However the virtue of prudence demands that we look at the world as it really is because if we don't we'll make mistakes. But it also demands of political economists that we develop a discipline that has a realistic view of human nature whilst taking into account both the inherent dignity of every human person and also of our imperfections and that is my theme tonight. Now Catholic social teaching has often been very good at this. The two bookends of the 13th Social Encyclical Letter Rerum Navarum in 1891 and Saint Pope John Paul II Encyclical Saintesimus Annus published in 1991 are particularly fine examples. Much earlier Saint Thomas Aquinas followed exactly the same approach. Indeed from what little I know as a non-theologian it is tempting to say that Saint Thomas perfected the art of understanding human imperfection and its implications for politics, the law and society. On the other hand too much modern economics makes unrealistic assumptions about human nature and human behavior which are designed to make economic problems tractable and amenable to mathematical analysis. And this approach can leave enormous gaps in our understanding. It is okay to make an economic model more tractable however if in the process you admit the most important aspects of the problem then your analysis may subtract from rather than add to the sum of human knowledge. Now if we are to develop economic principles underpinned by sound reasoning we need to start with a reasonably accurate description and understanding of the human person. John Paul II highlighted one aspect of this in Saintesimus Annus. He argued that the dignity of the human person requires that human persons should be able to use reason and act purposefully and freely in the economic sphere. Three other characteristics which I think are especially important are firstly no human person is omniscient that is there are limits to human knowledge. Secondly human persons are capable of good and thirdly human persons are capable of evil. These characteristics of human nature have profound implications for how we might think about economic problems and I shall explore these and then apply them to one area of public policy. However by way of context and it's not a total diversion I just wanted to begin by talking about the role of self-interest in economic life. Adam Smith pointed out that taking economic decisions on the basis of self-interest paradoxically often promotes the welfare of society as a whole. For example if businesses are to promote their own interests they must serve their customers well. This means that in a society that is based on freedom of contract and where corruption, nepotism and the plundering of the property of others are not prevalent the vast majority of economic transactions involve cooperation to the benefit of all parties. If you don't like Adam Smith's take on this then let's try John Paul II. He said the social order will be all the more stable the more it takes this fact into account and does not place in opposition personal interests and the interests of society as a whole but rather seeks ways to bring them into fruitful harmony. And self-interest is not inherently bad. At its best it is an extension of self-respect. For example it was in my self-interest that I took the train to Twickenham today rather than walked. If I had walked I would now be somewhere just north of Gattwick airport. It was though in no sense selfish of me to take the train. But of course self-interest can turn into selfishness and perhaps we can think of selfishness as disordered self-interest. And without question this is problematic. Just think for example of the damage that Fred Goodwin caused. So economists then need to consider given the reality of selfishness what are the best forms of economic and political organization? Well in some senses selfish people can without intending to actually do some good. Indeed an awful lot of good potentially by providing goods and services which are of value to others. Not always of course as Fred Goodwin demonstrated. A free economy can make the best out of the human condition by requiring even selfish people to serve others and do something useful. Indeed it might even force them to develop some virtues such as keeping their word, paying what they owe on time, taking care to produce a good product, treating their work as well if they want to keep them, cooperating with others and so on. Of course it would be much better if such people were virtuous but economic policy shouldn't be based on the assumption that they always will be. On the other hand if the same people were for example finance ministers in a corrupt country or even a low grade official in a corrupt country they could do enormous harm, much greater harm. This picture of course is Robert Mugabe, I don't have the figure for him, but Colonel Qaddafi amassed $200 billion and President Mabuta of the Congo $5 billion which actually is at the low end for a dictator at the expense of their people. So political or government control of an economy is certainly no substitute for ethics and concentrating power may well make things much worse. And I've mentioned the extreme case here but in a less extreme case it may create what we now call cronyism. So Pope Francis' home country Argentina and its neighbour Brazil are pretty good examples of this. So government regulation or direction of the economy cannot be assumed to be a corrective for greed and selfishness. So that is lesson one. However economists also need to understand that whatever policy choices are made there will be poor outcomes if people behave selfishly. As Pope Benedict said in his encyclical letter Caritas in Veritate, without, and he put this in italics, without internal forms of solidarity and mutual trust the market cannot completely fulfil its proper economic function. If you prefer to listen to economists then Nobel Prize winner Kenneth Arrow said more or less the same thing. He said virtually every commercial transaction has within itself an element of trust. It can be plausibly argued he said that much of the economic backwardness in the world can be explained by the lack of mutual confidence. And despite popular misconception Adam Smith said exactly the same. So economists shouldn't detach the study of economics from the study of ethics and I think too many have. Ethics are important for economic well-being. This is lesson two. Now even if government control of the economy is no panacea when people behave poorly it is of course difficult to avoid government action in cases where greed and selfishness cause great harm and clear injustice. So at the extreme we should not be content if business people go around murdering their competitors or bulldozing villages to construct mining operations. Now such extreme cases might demand some type of government intervention through a judicial system, I'm not going to make an anarchist case here, through a judicial system and the application of the criminal and common law. And human dignity and the common good demand that. However I want to dwell more on the question of the extent to which it is the role of government to get involved in more detailed aspects of the regulation and direction of economic life. Given the aspects of human nature that I've identified. I will focus mainly on the financial sector in this discussion on which the Vatican has actually made quite a lot of comment. In fact if you Google the term Pope calls for global regulation of finance there are 15 million 100,000 responses. Some of those at the bottom might be Alexander Pope or something but most of them I think relate to paper documents etc. Now to somebody who has read an A level or first year undergraduate textbook the role of government in economic life is easily defined. Economists start by making unrealistic assumptions about human nature in their models. When these assumptions don't hold for example if there's an absence of perfect information in the perfect competition model they argue that there has been what they call a market failure. They then ascribe a role to government regulation in correcting such market failures and this view is influential in public policy. The financial services authority, the former body that used to regulate financial services actually had this as their objective in their rationale for the regulation of the financial system, correcting market failures. So in doing this in pursuing this line of reasoning economists generally assume that governments act in the general public interest. That government regulatory bureaus have the perfect information lacked by market participants and so on. So in other words economists make unrealistic assumptions about how people behave in markets. They then relax these assumptions and follow up by making unrealistic assumptions about how people behave in government and there they stop. This is an intellectual dead end that's why they stop. And we need to go back. So instead let's consider the implications of making realistic assumptions about human nature when it comes to government regulation of economic life. So let's start with the limits to our knowledge. F.A. Hayek in his last book commented, the curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. The statement of Hayek's as an economist of course is based on an understanding of the reality and implications of human ignorance which resonates entirely with a Christian understanding of the limitations of the human person. We may think for example that top-down regulation of say the financial sector will improve matters, will correct market failures, but perhaps this is just hubris. Indeed it should be rather sobering for any regulator that there are close to 0.25 million academic articles that respond to the search term unintended consequences regulation listed on Google Scholar which is quite a limited Google search. Now as well as having to deal with the reality of human ignorance we also have to think about the reality of other aspects of human imperfection when it comes to the development of regulation. To begin with instead of being developed for the general public interest regulation can be shaped by private interests. Catholic social teaching including Pope Francis has warned about this without really exploring its implications. This is one of the areas of research for which James Buchanan won his Nobel Prize in 1986. One of the authors of the TV series Yes Minister the late Anthony Jay he died just a couple of weeks ago was in fact very much influenced by Buchanan's work. So we had a situation comedy actually based in effect on the work of a Nobel Prize winner. These private interests might be regulators themselves, they might be politicians or the private interests might be the regulated industry which may try to capture the regulatory process for their own benefit. And I think it's difficult to argue that private interest did not strongly influence the regulatory interventions immediately post the financial crisis especially in the US and Ireland I think to a lesser extent in the UK. In addition politicians and regulators may simply have cognitive biases which lead them to overestimate the efficacy of government regulation. They are not neutral arbiters and these are all manifestations of the reality of human imperfection which it's foolish to ignore. To put it simply one imperfect human institution government cannot be expected to perfect another imperfect human institution the market and it might not even improve it. Now of course as Francis Campbell said in Thought for the Day yesterday a public servant ought to act in the common good but it's dangerous to base public policy on the assumption that they always will. We should base public policy on the assumption that they are actually human beings like the rest of us. And you don't have to go very far to find interventions by government institutions that demonstrate human imperfection just as you don't have to go very far to find corporate behaviors that demonstrate human imperfection. For example in the run up to the financial crash the extensive international framework for bank regulation the Basel Accords explicitly encouraged securitisation and the development of the complex financial instruments described very effectively in the big short the film the big short that were at the seat of the crash. The US financial regulatory system also very much encouraged and gave government guarantees to the very same complex mortgage backed securities especially where those securities related to loans taken out by low income households. In addition to this US interventions by central banks over the 40 years before the crash stoked up moral hazard by using lender of last resort facilities to support banks that should have been allowed to fail. There's an excellent article by that on that topic by the Richmond Fed very accessible article and this was not the only error made by US central banks in the run up to the crisis and for that matter in the decades before. US regulators actually required banks to discriminate in favour of borrowers who had a low capacity to repay their loans and such loans were often granted without any proper documentation of ability to repay. And the list of regulatory interventions that encouraged behaviors that led to the financial crisis is almost endless. It's not that there is a lack of government regulation of the financial sector as some people suggest to put the regulation of finance into some kind of context in the UK. In 1979 there was one government regulator for every 11,000 people working in finance. By 2010 there was one government regulator for every 300 people working in finance and this excludes compliance officers that worked within banks themselves. At that rate of growth by the time sent Mary's students current students retire there will be more financial regulators than people working in finance again excluding compliance officers. That's not a particularly long projection I'm only projecting things about one and a half times the period I've just been talking about. There was no shortage of financial regulation it's just that it didn't seem to have the effects hoped for indeed much of it had the opposite of the effects hoped for. In addition one of the characteristics of the regulatory interventions of the past 40 years was that the taxpayer came to underwrite the reckless behavior of financial institutions. Given a Christian understanding of human nature nothing can be more foolish than underwriting imprudent and risky behavior in a situation where those indulging in that behavior take the profits and society as a whole bears the losses. It's certainly not a good way to help people choose the good. Now my point is not to excuse those responsible who worked within banks in the 2000s. The point is that nearly all actions taken by the regulatory authorities or central banks made the financial crash either no less likely or more likely. Those who regulated banks of course were simply carved out of the same block as the rest of humanity and share the same imperfections as the rest of it as the rest of us. And I should add by the way that in some countries where the banking system system was more entirely nationalized Slovenia being a good example of this but there are many others where there are different degrees of state control or ownership of the banks. The crash had just as catastrophic effects as it did in the UK and the US. So where do we go from here? Well Pope Francis often says that we don't want unfettered markets and he's right and his intentions in commenting on these issues are certainly good ones. But a free economy no more equates to unfettered markets if you'll forgive the analogy than freedom from government interference in sexual relationships equates to unfettered promiscuity. The issue is not fettered versus unfettered the question is who should do the fettering. Unfortunately the rich tradition of Catholic social teaching does have something to tell us about how to approach these issues. Though it has to be said that discussion of these things has to some extent been less apparent in recent years. And the particular aspect that I want to focus on is the way in which non-governmental institutions can regulate economic and civil life. So Santisimus Annus for example pointed out another task of the state is that of overseeing and directing the exercise of human rights in the economic sector. However primary responsibility in this area belongs not to the state but to individuals and to the various groups and associations which make up society. And these would include professions, trade unions and so on. And Rayram Navaram made similar points back in 1891. And the important principle in Catholic social teaching here is really the principle of subsidiarity which was defined in a papal encyclical letter of 1931. The letter was called Quadra Gessimo Anno and it was stated in that letter it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. In other words in this field of regulating the economy perhaps civil society and other institutions should be the main players or at least we should not talk and think as if they cannot be substantial players. So how have such societal non-governmental regulatory institutions emerged to regulate economic behavior in the past? Well actually in many fields they're actually undergoing a renaissance. So Uber for example is essentially a system of commercial private regulation of taxes which has overcome the huge problem of rent seeking by incumbents within the existing generally municipal regulatory system for taxes. And if any of you have ever trashed an Uber cab you will know that that regulation is effective. You would be excluded then from being picked up in the future. Closer to home the system of examining boards that existed before their emasculation by Kenneth Baker neatly balanced the interests of students, schools and universities and thus maintained standards and prevented the race to the bottom that many people believe that the offquel system is creating. The offquel regulated system is creating now. In the same area the City and Guilds, the Royal Society of Arts and Trinity Guild Hall were three regulators amongst many of professional, vocational and artistic qualification standards which developed in some cases two whole centuries before offquel was created. The development of towns and the constraints on the development of buildings was also often entirely regulated by private institutions in the 19th century. Very often I should say in mixed developments which were very sympathetic to the housing needs of the less well off. Now some of you may not be so sure, people have different tastes, but there are indeed many people who prefer Bath, Bourneville, Eastbourne, Edinburgh New Town and Southport which were all privately planned to later alternatives such as Skelmersdale and Crawley which were not. Even the adoption of country wide standard time was introduced entirely by an industry standard setting body, the railway clearing house, with no intervention from the government whatsoever. But perhaps where the area where these forms of regulatory mechanism were most prominent was in the field of finance. One of the extraordinary things about the financial sector in the UK up to 1986 was the way in which it developed its own regulatory institutions. One such example was the stock exchanges that developed in the late 17th century. And from their earliest days in the 1690s in the UK stock exchanges developed their own forms of regulation for members who were trading and then a bit later for companies the shares of which were quoted on the exchange. To take what is probably the earliest example of such rules, those members who did not fulfil their financial obligations were chalked on a blackboard under the heading lame duck so that members would know who was trustworthy and who was not. Not very sophisticated, but this was 1690 and it worked. Formal rule books for members and for companies quoted on the exchange then developed. The first was introduced in 1812 and then in 1909 the exchange famously banned members from simultaneously trading on their own book and giving advice in order to prevent conflicts of interest. You could use non-exchange regulated brokers and traders if you wished. There was an effective monopoly here because nobody wanted to but there was no statutory monopoly because the regulation was regarded as appropriate. And so successful was the London exchange and so demanding was it that its motto became my word is my bond in 1923. Now a Royal Commission of Inquiry reported on the stock exchange in 1878. It wasn't expected that it was going to be very flattering but in the end it was. And in its report it said that the exchange's rules had been salutary to the interests of the public and that the exchange had acted uprightly, honestly and with a desire to do justice. It further commented that the exchange's rules were capable of affording relief and exercising restraint, far more prompt and often satisfactory than any within the reed of the courts of law. And there were of course many other forms of institution in the world of finance that I don't have time to talk about. Friendly societies, mutual societies, trustees, savings banks and so on that developed from within the community in the 19th century. And in each and every case they had their own special forms of corporate governance designed to address specific problems that arise within financial markets. Just to give one example, in the days before central bank backed deposit insurance which was only introduced in the UK in 1979, the trustees savings banks offered deposits that were 100% backed by government treasury bills. Deposit insurance for commercial banks completely removed the comparative advantage of trustees savings banks and they disappeared. So these are all examples of the principle of subsidiarity at work. And there are many more examples such as the way up until 1986 an industry body of insurance companies limited commission payments to prevent financial advisors misselling products. That was abolished as I mentioned in the moment by the, effectively by the Office for Fair Trading in 1986 and this is a problem that the financial regulators have been wrestling with ever since. All the way in which defined benefit pension funds operated before the 1986 Social Security Act. These institutions were so successful in regulating behavior in financial markets that it raises the question, what happened? I'm getting a bit nervous here because I'm wondering if Brian Griffiths was in number 10 at the time these institutions had their wings clicked. But anyway, let me move on. With regard to the stock exchange and also as it happens the agreement to limit commission payments to which I've just referred, the government used competition law to effectively abolish and make illegal many of the regulatory powers that the stock exchange had. This was a process known as Big Bang. Indeed, the fact that these private systems of regulation were so comprehensive is indicated by the fact that Big Bang is often described as deregulation. In fact, Big Bang was the government prohibition of the use of powers by a private regulatory body. In many of these cases where the state acted to prohibit the civil society and market-based forms of regulation, very often in the 1980s, the problems that have been left behind remain still unsolved by the Financial Services Authority and its successor three decades on. Now, I'm conscious the time is running short. I was also keen to talk about the role of civil society in the regulation of environmental resources because I think that this was a huge emission from Pope Francis' recent encyclical on environmental issues, Laudato Si, which is otherwise full of a lot of theological and practical wisdom. So I don't have much time to talk about this, but I'll write more about it in a published text later. So just to note, Eleanor Ostrom won her Nobel Prize in Economics in 2009 for her work in this field. She's the only female winner of the Nobel Prize in Economics, and her work is widely admired on all sides of the political spectrum. In fact, just before she died, she gave the Institute of Economic Affairs a higher lecture, which you might regard as being on one end of the political spectrum to several hundred people in Westminster. And in the morning, she had given a lecture to three-and-a-half thousand people at what you might call a radical left-wing environmentalist conference which was equally warmly welcomed in both events. Ostrom's thesis is simple. Communities from the bottom up, and their work was mainly with poor communities and very empirical, are extraordinarily effective in developing forms of regulation to control the use of environmental resources such as fisheries and forests. They develop their own systems of enforcement and governance to ensure conservation and sustainability. And Ostrom's study of these mechanisms involved examining how people actually worked in the real world to solve their own problems given the realities of human nature and the imperfections inherent in political institutions. And I think economists could learn a lot from that mode of study. And I think they're potentially important not just in political economy, but also for developing Catholic social teaching. All her principles, she had no familiarity with Catholic social teaching at all, but I think all her principles resonate very strongly with Catholic social teaching. So let me bring this to a conclusion in two stages. The problem with much debate in political economy is that it's often assumed, and sometimes explicitly stated, that the market that is not controlled by government regulatory bodies is somehow unfettered. We should instead ask the question, what are the most appropriate institutional arrangements for regulating economic activity, given what we know about human nature? Economics is about human action in the economic sphere, and it needs to be built on realistic assumptions about human nature. Economists such as Ostrom, Coase, Buchanan, North and Hayek have addressed economics this way. They've all run Nobel Prizes, but they tend to be bit-part players in economics syllabuses. Elegant abstractions are much preferred. The mechanisms I've described allow individuals, those involved in commerce, civil society institutions, and the community more generally to use their reason and initiative to resolve problems. So essentially this is the principle of subsidiarity at work. And the principle of subsidiarity cannot be decoupled from that of human dignity. These institutions have been very successful in promoting a sense of civic responsibility, and they nurture important virtues such as trust, as in, my word is my bond. Such characteristics were absolutely at the core of the institutions of financial regulation that we used to have, and Ostrom shows that they are at the core of the institutions developed in poor countries to regulate environmental resources. These kinds of institutions also fit well with realistic assumptions about human nature. To begin with, they recognise the limits of human knowledge and the consequent impossibility of trying to perfect, or sometimes even improve, the economic system from outside using highly complex systems of bureaucratic regulation. The US Act, designed to regulate the banking system post the financial crisis, for example, runs to 22,000 pages, including associated regulations. Instead the systems I've described allow experimentation and adaptation to local circumstances and the use of on-the-ground knowledge. These institutions also allow errors to be made on a smaller scale when errors do inevitably happen. Indeed, you could say it's difficult to think of anything more monumentally irresponsible than the creation of a global system for regulating finance unless the objective is actually to deliberately create systemic risk by ensuring that the mistakes within that system have global ramifications. You could say that only God could successfully design such a system. And those waiting for the next disaster, perhaps the development of the international system of insurance regulation, Solvency 2, are quite sure that he had no hand in designing that. These approaches also recognise the reality of human imperfection in the political sphere. Government regulations of financial and other systems are not produced by a uniquely disinterested group of people and are indeed strongly influenced by corporate interests and that the regulation is often supposed to restrain, one thinks of Goldman Sachs, perhaps. By contrast, the regulatory institutions I've described used to be formed because participants in economic life come together knowing that their interests and those of wider society will be better served if they mutually agree to restrain their behaviour according to a set of rules. They are contestable in the economic sense that if they do not serve their purpose, they will eventually disintegrate. However, there are problems with these systems, with these forms of regulation that I've discussed. They can give rise to market power, and as I've said, the stock exchange had its wings clipped, well, essentially had its monopoly of regulation abolished because of the fear of, because of action taken by the Office of Fair Trading, because it was regarded as anti-competitive. And trade unions, which helped regulate relationships in the labour market, of course, had their wings clipped as well by the same government for exactly the same reason. However, perhaps we've thrown out the baby with the bathwater, or perhaps the financial crash showed, in fact, that we threw out the baby and kept the bathwater. And this leads to my final conclusion. However we regulate economic activity, there is no substitute for resourceful, ethical people in all sectors of the economy. Catholics believe that the virtues are discernible by all people of good will. As a Catholic university, I hope that we will help students discern the right values, because those right values, more than anything else, are responsible for making the business world a better place. So perhaps I can give the final words to our Chancellor Vincent Nichols, who said in his 2010 pre-General Election paper, in place of virtue, we have seen an expansion of regulation. A society that is held together just by compliance to rules is inherently fragile, open to further abuses which will be met by further expansion of regulation. This cannot be enough. The virtues are not about what one is allowed to do, but what one is formed to be. They strengthen us to become moral agents, the source of our own actions. So let us base our economics on the sound understanding of the human person, but also re-enrich Catholic social teaching with a renewed understanding of the respective and distinct roles of government and society. Thank you.