Finance and morality: a history of tension

In September 2008, the global financial system, which had been in a precarious state for over a year, very nearly collapsed altogether. Government bail-outs kept the banks going, but the repercussions included a prolonged economic recession and a string of national debt crises in the Eurozone. As ordinary people suffered from the ensuing unemployment, welfare cutbacks and other austerity measures, the bankers and hedge fund managers widely blamed for the crisis seemed to get away scot free and continued to earn enormous salaries and bonuses. Not for the first time in history, there is currently a widespread feeling that the financial sector as a whole is deeply unethical and many of its practitioners are routinely pilloried by press and public alike. Despite this concern, and despite a very well-established tradition of writing and research in business ethics generally, there have been remarkably few attempts to treat finance ethics dispassionately, either in the research literature or in textbooks. This book is an attempt to fill this gap.

Finance and ethics are not concepts that fit naturally together. As far as its practitioners are concerned, finance is simply nothing to do with ethics. You sometimes get people behaving badly, in finance as in any other field, but that has nothing to do with finance itself, which is seen as a largely technical, amoral field of activity in which questions of good and bad, in the moral sense, simply don’t arise. Whether you are studying finance or practicing it, ethics is not something you expect to have to think about. People outside the field tend to take a slightly different view. They agree that finance has little to do with ethics, but see this as a failing, either viewing it as out-and-out immoral or, more commonly, seeing something immoral in its very amorality.