The author posits that greed and insensitivity to the needs of others are corrosive values that have engendered the global economic crisis. Examples are cited to support the thesis that it is primarily an ethics crisis that has resulted in the distortion of the US economy, such that the middle class is sliding into poverty while the wealthiest 1 per cent is ever more powerful and wealthy. The irony of the predatory capitalism being practised is that it is ultimately self-destructive (...) to the practitioners. The unsustainability of the present system is discussed along with solutions, including stakeholder management, corporate and personal altruism and spiritual awakening. (shrink)

Previous edition, 1st, published in 1971.

The author identifies the major micro-, meso-, and macro-level financial risk shifting factors that contributed to the Great Global Recession and how the absence of a compelling moral vision of responsible financial risk management perpetuated the economic crisis and undermined the recovery by blind reliance upon insufficiently accountable bailouts. The author offers a new theoretical model of Sustainable Stakeholder Capitalism by exercising moral imagination which inclusively and moderately balances four multi-level factors: types of capitalism, moral theories, human nature drives, and (...) credit risk profiles. Finally, the author recommends micro-, meso-, and macro-level practical reforms to prevent a recurrence of the current economic freefall, to re-create systemic global financial institution integrity, and to promote responsible risk management for sustainable global prosperity for current and future generations. (shrink)

Systemic financial risk is one of the most significant collective action problems facing societies. The Great Recession brought attention to a tragedy of the commons in capital markets, in which market participants, from the first-time homebuyer to Wall Street financiers, acted in ways beneficial to themselves individually, but which together caused substantial collective harm. Two kinds of risk are at play in complex chains of transactions in financial markets: ordinary market risk and systemic risk. Two moral questions are relevant in (...) such cases. First, from the standpoint of interactional morality, does a person have a moral duty to avoid risk of harm to others if their financial transactions contribute in some way, however small, to the loss or harm? This article identifies the conditions in which persons are morally responsible in such cases. Second, from the standpoint of institutional morality, how should society distribute the risk of harm associated with massively complex financial markets? This question is considered in the context of the home mortgage credit market. Luck egalitarianism, in particular a Dworkinian insurance scheme to allocate risks and resources relating to mortgage credit and private home ownership, offers substantial promise. (shrink)

This paper suggests that “systemic risk” has a distinctive kind of moral significance. Two intuitive data points need to be explained. The first is that the systematic imposition of risk can be wrongful or unjust in and of itself, even if harm never ensues. The second is that, even so, there may be no one in particular to blame. We can explain both ideas in terms of what I call responsibilities of “Collective Due Care.” Collective Due Care arguably precludes purely (...) aggregative cost-benefit decision-making and requires one kind of “precautionary” attitude in public choice. (shrink)

ABSTRACT:Drawing upon John Rawls's framework inThe Law of Peoples,this paper argues that MNEs have a responsibility to promote well-ordered social and political institutions in host countries that lack them. This responsibility is grounded in a negative duty not to cause harm. In addition to addressing the objection that promoting well-ordered institutions represents unjustified interference by MNEs, the paper provides guidance for managers of MNEs operating in host countries that lack just institutions. The paper argues for understanding corporate responsibility in relation (...) to the specific institutional environment in which MNEs operate. (shrink)

The paper develops a responsibility-based account of professional ethics in banking. From this perspective, bankers have duties not only toward clients—the traditional focus of professional ethics—but also regarding the prevention of systemic harms to whole societies. When trying to fulfill these duties, bankers have to meet three challenges: epistemic challenges, motivational challenges, and a coordination challenge. These challenges can best be met by a combination of regulation and ethics that aligns responsibilities, recognition, and incentives and creates what Parsons has called (...) “integrated situations”. Professional associations play an important role for this purpose, especially as spaces in which peer recognition is earned. But financial incentives equally need to be brought in line, for example, through deferred bonuses or claw backs. Such measures can create a new culture of accountability in banking. (shrink)

This paper surveys the current philosophical discussion of the ethics of risk imposition, placing it in the context of relevant work in psychology, economics and social theory. The central philosophical problem starts from the observation that it is not practically possible to assign people individual rights not to be exposed to risk, as virtually all activity imposes some risk on others. This is the ‘problem of paralysis’. However, the obvious alternative theory that exposure to risk is justified when its total (...) benefits exceed its total costs faces the standard distributional challenges of consequentialism. Forms of contractualism have been proposed as a solution, but how exactly such theories can be formulated remains problematic, especially when confronted with the difficult cases of mass, novel, risk such as climate change. (shrink)

Fortis, the leading Benelux financial group, had been a success story of successive mergers of bank and insurance companies, with leadership in corporate social responsibility (CSR). One year after the acquisition of the major Dutch financial conglomerate ABN AMRO, the global financial crisis caused the collapse of the Fortis group. The purpose of this article is to use the case study of Fortis’s recent fall as a basis for reflective considerations on the financial crisis, from stakeholder and ethical perspectives. A (...) selected number of key events of the history of the dramatic crisis at Fortis will be analysed from different ethical frameworks. Special consideration will be given to fairness of communication, shareholder activism and conflicts of interests of CEO’s mergers opportunities. A confrontation between the CSR policy and the reality raises the fundamental questions why the powerful CSR guidelines and ethical principles did not help in the assessment of the risks. (shrink)

The 2008 global financial crisis raises ethical as much as financial questions. Moral outrage centered on the imbalance between banks profiting from excessive risk-taking in good times and taxpayers suffering the costs in bad times. The paper analyzes this imbalance in terms of ethical theory. It first develops a rights-based framework to answer questions about the moral obligations of states and banks towards each other. It then criticizes standard economic thinking, which de-moralizes the phenomenon of moral hazard. Moral hazard between (...) states and banks arises in a context that cannot be interpreted as normal economic contracting, but should rather be characterized as governed by an implicit social contract giving rise to moral obligations. (shrink)

abstract Part 1 of this essay argues that one of the most important contributions of philosophers to sound public policy may be to combat the influence of bad Philosophy (which includes, but is not limited to, bad Philosophy produced by accredited academic philosophers). Part 2 argues that the conventional conception of Practical Ethics (CPE) that philosophers bring to issues of public policy is defective because it fails to take seriously the phenomenon of the subversion of morality, the role of false (...) factual beliefs in this subversion, and the vulnerability to the exploitation of our moral powers that our social-epistemic dependency entails. Given the serious risks of the subversion of morality through the propagation of false factual beliefs, CPE's near exclusive emphasis on identifying sound moral principles greatly constrains its potential contribution to the Negative Task of Practical Ethics, the endeavour to reduce the incidence of the most grievously wrong behaviour. Practical ethicists should focus more on the ethics of believing, and develop a more sophisticated conception of the moral and epistemic virtues of individuals and of institutions, one that includes protective meta-virtues, whose function it is to guard us against the more frequent and predictable subversions of morality, including those subversions that are facilitated by the processes of belief-formation that our social institutions and practices foster. (shrink)

This short theoretical paper elucidates a plausible theory about the Global Financial Crisis and the role of senior financial corporate directors in that crisis. The paper presents a theory of the Global Financial Crisis which argues that psychopaths working in corporations and in financial corporations, in particular, have had a major part in causing the crisis. This paper is thus a very short theoretical paper but is one that may be very important to the future of capitalism because it discusses (...) significant ways in which Corporate Psychopaths may have acted recently, to the detriment of many. Further research into this theory is called for. (shrink)

An argument against Parfit's view (in his chapter of Reasons and Persons on five mistakes in moral mathematics) that, rather than maximizing the difference one makes as an individual, one should join that group whose members together make the most positive difference in cases involving imperceptible benefits. It is shown how Parfit's defence of this view has the problematic implication either (1) that each outcome is less beneficial than itself or (2) that "less beneficial than" is not transitive.