OVER A year after the darkest days of the financial crisis, many now hope for a return to business as usual. Others argue we'll only avoid future crises if for-profit financial services are balanced by institutions driven by different values and business models.
In the 19th century, most consumers depended on services from building societies, cooperatives and mutuals that were socially owned, and combining business sense with a moral purpose. In the 20th century most of these were squeezed, both by big government providing welfare, and by big businesses providing bank accounts and mortgages, and then towards the end of the century by legal changes that encouraged the managers of building societies to privatise themselves.
All of the building societies that went private effectively went bankrupt; those that held onto their traditional structures survived. A similar pattern has been seen worldwide. Purely commercial financial markets turned out to have a weak grasp of risk. Socially owned ventures generally - but not always - have better judged which individuals or small businesses could handle their debt.
Reforms to strengthen the civil dimension of financial services are now long overdue. …