Virtue regained amid market bloodshed

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Paradise Lost, Illustration by Gustave DoréSin and punishment always sell better than virtue and reward. More people read Inferno and Paradise Lost than Paradiso and Paradise Regained. Terror and pity, too, attend the doom that follows the fatal flaw, not the lucky escape.

Perhaps that is why the financial crisis and the attempts to resolve it have been received so sullenly. The sinners who have infested banks, finance companies and regulatory boards are evident. But because they have wired us to the explosives they placed in their systems, they and their kind stand to be rewarded by a scheme dreamed up by their fellow sinners. Less Shakespeare Act V than Schwarzenegger Act I.

The crowd, cheated of blood, understandably boos players and referees alike. Who wants to hear of virtue now?

But if the reason why the financial markets collapsed was a culture of greed, it may be helpful to ask what a culture of virtue might look like.

Systematic greed and evasion of responsibility destroy the trust that is the condition for the market to operate. The corrosion of trust was masked because bankers, financiers, economists, regulators and ordinary people assumed greed was good and asked only technical questions about how the markets could continue to reward it.

Now that the naked Emperor of the Market has frozen up, we can ask the deeper cultural and ethical questions about how he might be clothed warmly in trust.

Trust is built and maintained in a culture and not made by technical adjustment to financial instruments. That is to say trust depends on relationships. When we are confident people are committed to a worthwhile enterprise, that they are faithful in their relationships to each other and to those for whom they work, and have a proper sense of priorities, we trust them. When we believe these values are generally shared by the participants, we shall trust the markets.

It may seem old-fashioned and purely homiletic to speak of worthwhile enterprises. But there is a simple test. If, after we describe in simple English what we do, our audience laughs or looks at us as if we had contracted moral leprosy, our enterprise is probably not worthwhile. Worthwhile enterprises benefit people by providing them with goods or services that enhance their lives. To be committed to an enterprise means focusing on the quality of what we do and make. We are in it for the long haul, not for short-term profit.

By these criteria banks that lend to people engaged in worthwhile enterprises may be trusted. If they lend imprudently or exploitatively because they are focused on short-term profit, they corrode trust. Merchant banks which load companies with debt and themselves with massive profit, poison the culture.

A culture of trust also grows when we recognise that in an enterprise there is symmetry between its internal and external relationships. We easily recognise the opposite. When a bank, for example, boasts of the quality of its attention to its clients but forces its managers to grade their employees in public and to list all their defects, it reveals a basic lack of respect for people. This disrespect will inevitably poison both its relationship with its clients and the enduring prudence with which it is called to steward its resources.

Confidence also grows when we see that those responsible for an enterprise have a balanced view of the relationships that contribute to its welfare. If they develop the enterprise in a way that respects the welfare of employees, shareholders, clients and suppliers, we see them as trustworthy. If they see only the short-term profits of executives or shareholders as important, confidence will collapse.

These conditions for building trust suggest why enormous salaries paid to executives are destructive. They are a powerful symbol. They indicate that the welfare of the enterprise has been subordinated to greed, that there is no symmetry, no respect, in the relationships that form the enterprise.

Financial markets need a culture of trust to thrive. The values that build confidence must be shared by those who compose it. Given the strength of the culture of greed in the market, cultural change would need a miracle. The narrow technical training of most executives and financial journalists means that they never look at the large human questions that lie beneath the figures.

Given that virtue is defenceless against its enemies, we should insist that the market be regulated so that greed is at least restrained. We should also cultivate a larger view of the human comedy by balancing our study of the financial pages with a leisurely reading of Dante's Inferno and Paradiso.

Andrew HamiltonAndrew Hamilton is the consulting editor for Eureka Street. He also teaches at the United Faculty of Theology in Melbourne.

Topic tags: andrew hamilton, global economy crash, virtue



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Andrew, Trust is the cement, the glue or whatever you may describe it of social relations between humans. Economic activities are part of such relations. You are spot on!
I can still remember my grandfather reading the Bulletin to me, he in his 70's, I aged 7; circa 1939. The masthead for finance and business was "Business, Robbery, etc." I asked what that means. His answer, "There are honourable rogues, there are likable rogues and there are SPIVS" (His explanation of this term was Those you find in a dry river bed under a stone) Jock
John W McQualter | 06 October 2008


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