Bank bosses argue capitalism must regain sense of social responsibility to restore public faith in its virtues.
Concern about inequality and egregious greed is shared by the high priests of the financial system, it seems.
The governor of the Bank of England, Mark Carney, warned in a recent speech that for markets to sustain their legitimacy they need to be not only effective but fair.
And what is fair? Carney invoked a famous thought experiment by the American philosopher John Rawls.
Imagine that you did not know into what circumstances you would be born. What sort of society would you want there to be? Dog eat dog? Or one which did the best it could for the least well off?
There is a sense, Carney said, that the basic social contract made up of relative equality of outcomes, equality of opportunity and fairness across generations is breaking down.
"Within societies, virtually without exception, inequality of outcomes both within and across generations has demonstrably increased," he said.
"Few would disagree that a society that provides opportunity to all of its citizens is more likely to thrive than one which favours an elite."
Compounding the effects of globalisation and disruptive technological change has been market fundamentalism - an almost religious belief in the power of markets.
See a video replay of Carney's speech here:
Carney's New Zealand counterpart, Graeme Wheeler, evidently agrees.
"Policymakers around the world are concerned with what has been happening in terms of the distribution of income," he told the Herald.
"If you look at the data in the United States in terms of the bottom three deciles and the movement that has taken place in the top 1 per cent, it is quite frightening just how much that distribution has changed."
Globalisation is part of the explanation, Wheeler said.
"You see the shift in income distribution taking place as capital is allocated around the world and seeks opportunities. The demand for labour becomes very much an international demand for skilled labour and prices unskilled labour accordingly."
Reserve Bank Governor Graeme Wheeler says the world's policymakers are concerned about income distribution. Photo / Mark Mitchell
Policymakers have lost confidence in terms of some of the practices which have taken place in financial markets, he said.
"The compensation levels are outrageous in many cases for the value added truly generated."
The movie, The Wolf of Wall Street, is exaggerated at times, he said. "But there is a basis of truth there, I guess, that is deeply concerning. A lot of the practices on Wall Street are not as open and competitive as you would want to see."
The Occupy Wall St movement had a lot of powerful points to make. "But they didn't have a strong enough framework about what to do about it. It sort of fell apart, which was a shame," Wheeler said.
Carney said the global financial crisis had strained trust in the financial system.
"Many supposedly rugged markets were revealed to be cosseted: Major banks were too big to fail, operating in a privileged 'heads I win, tails you lose' bubble. There was widespread rigging of benchmarks [like Libor] for personal gain. And equity markets demonstrated a perverse sense of fairness, blatantly favouring the technologically empowered over the retail investor.
"We need to recognise the tension between pure free market capitalism, which reinforces the primacy of the individual at the expense of the system, and social capital which requires from individuals a broader sense of responsibility for the system."
Turning to what central banks can do about it, Carney said their roles as the guardians of price stability and financial stability are supportive of social welfare.
"Inflation hurts the poor the most and the real costs of financial instability - unemployment and the seizure of credit - are likely to be felt most acutely by the poor." But he also acknowledged that, while not to have acted would have been catastrophic for everyone, the response to the financial crisis has had distributional consequences - a point echoed by Wheeler.
The Occupy Wall St movement had a lot of powerful points to make, says Graeme Wheeler. Photo / AP
"Extraordinary monetary stimulus - both conventional, through low short-term interest rates, and unconventional, through large-scale purchases of assets - raised a range of asset prices, benefiting their owners, and lowered yields, benefiting borrowers at the expense of savers," Carney said. But that has to be balanced against the long-lasting harm deep recessions do to the working lives of those affected, especially the young.
Carney is careful not to arrogate to central banks essentially political decisions about the redistribution of wealth or promotion of social mobility. "It is only in extreme circumstances, such as in the wake of a financial crisis, that we can have some limited influence on social mobility and intergenerational equity."
Perhaps the most severe blow to public trust was the discovery that at the heart of the global financial system lie scores of banks and other institutions deemed too big to fail, he said.
"Bankers made enormous sums in the run-up to the crisis and were often well compensated after it hit. In turn, taxpayers picked up the tab for their failures. That unjust sharing of risk and reward contributed directly to inequality but - more importantly - has had a corrosive effect on the broader social fabric of which finance is part and on which it relies."
The international policy response to that has been for the Financial Stability Board to identify systemically important institutions, make them subject to higher standards of resilience, and develop a range of tools to ensure that if they do fail, they can be resolved without severe disruption to the financial system and exposing the taxpayer to loss.
Proposals will be put to the forthcoming G20 meeting in Australia which ensure private creditors stand in front of taxpayers when banks fail.
Arguably the Reserve Bank with its open bank resolution regime has already moved in that direction.
Carney's argument in short is that, if financial capitalism comes to be widely perceived as merely a mechanism by which the rich rip off the rest of us and capture almost all the gains from economic growth, then a powerful engine for delivering investment, innovation and prosperity is at risk.
Repairing the damage already done is not only a task for regulators.
It also requires a sense of responsibility to the system as a whole within the financial institutions themselves, the inculcation of which has to come from their boards and senior management.
