Emeritus Professor of Justice Systems, Centre for Socio-Legal Studies, University of Oxford
Any views expressed herein are not necessarily the views of CIPL nor Hunton Andrews Kurth LLP
That model was vulnerable to rumblings of the misbehaviour of executives and corporations, such as Enron, WorldCom and Ponzi schemes like that of Madoff. But the wheels came off in the 2008 global financial crisis when the selling of mortgages to people who were unlikely to be able to repay them (sub-prime), and their bundling and on-selling as CDOs, was revealed when interest rates turned and the entire banking system was shown to have wholly inadequate asset buffers, leading to the entire system crashing and having to be bailed out by states using taxpayers’ funds. Blame was placed at the use of targets, remuneration practices and a constant focus on stock values and reporting driving short-term profits. Short-termism was again held up when it became clear that unconstrained market behaviour on carbon emissions was likely to render all “valuable” assets as irrelevant as the world warmed through human activities.
This is a very short and simplistic account. But it highlights the need for society to take steps to protect itself. So we see changes such as in regulation of activities, corporate governance, concepts of stakeholder value, corporate responsibility, stewardship and so on.
This background provides a warning against complacency and establishing systems that are insufficiently robust. The opportunities for use of data in a new digital and AI world are immense―but they are opportunities for good and bad purposes and outcomes. So we need to think carefully about the design and operation of effective systems that balance prosperity and protection. Those tasks essentially involve employing technical expertise, ethical values and principles, effective governance and transparency, objective scrutiny and opportunities for legal intervention.
Is it inevitable that prosperity and protection are opposing objectives and forces? They need not be. Many sectors achieve successful outcomes and balance. The findings of behavioural and social psychology are underpinning fresh and effective approaches to motivated, effective people in commercial organisations, to basing activities on ethical values, and to engaging so as to increase performance―in outcomes that deliver both economic success and compliant protection. An inspiring example is the global aviation industry that achieves safety through ensuring open and just culture throughout the sector.
We are in the early stages of using and understanding uses of data, some corporate actors are young and huge, many people face difficulties in engaging and complying with new rules, and regulation is new. All of these people and systems will need to evolve. For example, new forms of regulation, engagement and intervention will be required. Protection is not negotiable; it’s what society needs, wants and has a right to expect.
I believe that the key concepts in framing the future are: ethical values; cooperation in sharing ideas, information, experiments, learning and making changes; independent oversight; accountability; sharing knowledge, building confidence and increasing trust; and delivering outcomes.