Morality and the GFC

The trouble is that we find it much harder to recognise or acknowledge this moral failing in our own lives. It’s very easy for me to pick on “greedy” bankers and to be offended by the $100 million bonuses some executives were paying themselves even after their institution had been sold into the hands of the US Government - or just immediately beforehand. But what about me? Did I sell shares in banks that weren’t performing well and buy shares in other banks that promised higher dividends or higher capital gains because they were taking on more risk? Did I move my funds from one investment fund to another for the sake of a few basis points - to increase my aggregate return, thereby encouraging the CEO to take more risk, and strive for even higher returns?

Well, yes; but that’s just one person. Surely I don’t make a difference? Oh yes I do; when all those little decisions are aggregated up, right up to the top, there is a megaphone screaming into the boardrooms and executive suites of these organisations saying, “More, more, more or you’ll face the music.” I find it easy to see the consequences of other people’s greed but much harder to recognise my own failing in this regard. There’s something in the Bible about motes and planks in people’s eyes, I seem to recall …

We can restore our faith in the financial system but we must first restore our faithfulness towards others. We’ve got to begin this process by striving to suppress our inclination towards self-serving behaviour. It’s as strong in me as much as anybody else. I mean that’s the way we’re built. We’ve got to look beyond our narrow self-interest. Jesus had a nice expression for it. He said, “Love your neighbours as yourselves”. We do love ourselves. How hard it is to love our neighbours like that.

A moral crisis requires a moral remedy. People very readily talk about the need for leaders with integrity. But what are leaders with integrity? They are people who do not compartmentalise their lives, who do not divorce their moral principles, if they have any, from their daily actions. Integrity is about wholeness; it’s about no dualism; it’s about walking the talk; it’s about trying to re-meld your technical expertise with its philosophical foundations.

Restoring faith in our financial institutions requires us first to restore our faith individually that there is more to live for than we can taste, touch and see. That’s the first bridge, and then there’s a second one: to restore our faith that we can live for other people as much as for ourselves; that we should reject selfishness and greed in ourselves as well as in others.

Resolving the credit crisis ultimately requires that we resolve this crisis of faith. It involves re-building trust. But how do you re-build trust? Where do you find the raw material to build trust? My answer is that you build trust by digging “moral wells”, and you need to sink them deep. Then you “pump up” trust from these moral wells. And with that trust you restore faith in institutions. And on that faith you restore the creditworthiness of borrowers and lenders and financial institutions.

You may well be thinking at this point: “So that’s where this is heading: a plaintive call for moral revival.” Well, yes, I am making a call for moral revival. “Then let me put it to you that that is a quixotic or utopian aim. Sure, if we were all good, this wouldn’t have happened in the first place. What you are trying to do is reform human nature and that’s a hopeless quest.”

Perhaps. But conjure with this. Robert Fogel, a Nobel Prize-winning economist, wrote a book in 2000 called, The Fourth Great Awakening. Fogel goes back in economic history and identifies three great moral awakenings. The first began with the campaign waged by the Clapham Sect to abolish the slave trade; it ended with the passage of the Great Reform Act of 1832.

In this book, Fogel says he believes we are on the cusp of a fourth great awakening, and argues that we will awaken to (in his words) a “revulsion against materialist corruption”. How prescient is that? I don’t know whether we are on the cusp of a fourth great awakening or not, but I do know that it’s happened before, and so I figure it can happen again. But if it does happen again - if we do dig new moral wells, pump up trust, re-build faith and re-establish creditworthiness in our financial institutions, and even in our lives - it will have started with me, and my attitude to living for more than just my own stomach and my own wallet.