I think we’re going through a commercial revolution in reverse.
In the 12th – 14th century, finance gradually worked its way free of ecclesiastical limits, and burst out into an orgy of innovation which has lasted until the present day, when the age of leverage appears to be coming to an end.
However, all is not completely bleak for the City. The two types of finance that seem set to grow are (1) Islamic finance, and (2) renewables / carbon finance. These young markets have very rosy outlooks, and they’re on the whole centred in London.
It struck me today that these two markets are actually very similar. They’re both ‘green’, OK, that’s not a big similarity. But they both also involve finance that is sanctioned by moral boards.
So, for example, an Islamic bank like the European Islamic Investment Bank sanctions its activities by having a Shariah board that gives the ethical thumbs up to any deal it does.
An environmental finance fund like the European Carbon Fund also has its board of (mainly bearded) experts who also give the ethical thumbs up to any deals it does.
Finance is slowly working its way back into the ecclesiastical strictures – either of Islam or of the new religion of Gaia – out of which it burst all those centuries ago. It’s going back into the womb.