The government and the Labour Party disagreed yesterday about what sort of enquiry there should be into the Libor scandal, but they both agreed there're needs to be such an enquiry. Something went wrong and it's important to find out why. What interests me, however, is a very much bigger question. Something's gone profoundly wrong, not just with the banks, but with so much else in recent years: MP's expenses, phone hacking, financial mis-selling and the widespread irresponsibility that brought the whole financial pack of cards come tumbling down.

What's gone wrong? And how did we get into this terrible state? There're some very interesting answers now beginning to emerge, particularly, I think from the Harvard Professor Michael Sandel. Here's just one of the vivid examples from his latest book. In Israel on one day in a year students go from house to house collecting for good causes. Some economists decided to conduct an experiment. One group of students were given a motivating speech and sent on their way. Two other groups were promised a personal bonus on all they collected. This did not come out of the money given for good causes. What the economists discovered is that the group who acted on a purely voluntary basis collected as much as 55% more than those who were given a personal financial reward. Sandel's first point is that economic incentives might not even work from an economic point of view, but his main theme is that they can crowd out and undermine precious values, like doing something good for its own sake, or a sense of service to society. If Sandel is right and our most fundamental values are being eroded by giving everything in life a monetary value, this has, I think, huge implications for the market itself. For as the great founding father of modern capitalism Adam Smith stressed time and again, the market depends on non-market values like honesty and trust.

By seeing everything in economic terms we are undermining the very values on which the market itself depends. Sometimes when particularly depressed about the worst effects of market capitalism and I wonder if there is a better way, I go back and remind myself of why markets exist at all. People come together in a local town to sell eggs, chickens and vegetables to get cash so that they in their turn can buy other food, animals and other goods. The market is a human contrivance so that we can all live, and live better than if we were simply on our own. It's a means to an end not an end in itself. To adapt the words of Jesus, the market exists for humans and not humans for the market. It has to be set within that wider frame of reference of human community and those values on which all human community depends.