The ethical dimension of finance

What are the alternatives to the economic and financial system of the Western world, marked by an unprecedented crisis? Some answers are provided by éthiEco, a joint initiative of ALCIC (Luxembourg’s association of independent workers and officers), ALUC (Luxembourg’s Association of Catholic academics), CPMT (Pastoral care centre for the job environment), ErwuesseBildung, Caritas Foundation of Luxembourg and of the « Justice et Paix » Commission in Luxembourg. In the document “The ethical dimension of finance”, éthiEco illustrated the causes of the current financial crisis, proposing man-customized ethical solutions. Ample extracts follow. Over-covetous profits. One of the main reasons for the current financial crisis is the short-term evolution of financial activities aiming at over-covetous gains that risk jeopardizing the economy. […] However, while this trend could be foreseen, the crisis’ duration and extension were not. Financial stakeholders (bank officers and in-and-outers) and political actors (in their regulatory assignments) ought to have been aware of it. Today, their joint responsibility must be acknowledged. Their improvidence ought to be viewed against a wider framework; the finalities of finance thus ought to be questioned. Political leaders are in charge of regulation, which includes the social – if not downright ethical – dimension. In concrete terms, the financial world should be at the service of the economy. It is expected to envisage the long-term impact of its performance and be more conscious of its responsibilities in terms of systemic fallout and collateral damage. More consistent political claims. The financial crisis and the tools leading to its recovery can be isolated from the other problems afflicting the planet. 35 billion dollars a year are still missing for the Millennium goals’ achievement pertaining to poverty reduction,- an amount that is 20 times lower than the sum allocated by the U.S. for banks’ bailout, and 40 times less than what the European States are willing to invest to rescue the European banking system. Likewise, less than 3 billion dollars a year would be enough to ensure adequate treatment to 19 million undernourished children across the world. Political leaders that wish to put finance and the economy to the service of man and of sustainable development, ought to realize that they are being called into question as relates to the proportion of the invested sums, and in terms of political coherence. However, efficiency is another crucial factor. The banking crisis requires politicians’ massive intervention, in order to counter the systemic risk. The ongoing – worsening – social inequalities coupled with world poverty, conceal real and true – albeit latent – systemic dangers for humanity. Poverty reduction would certainly contribute to world peace and to the fight against international terrorism. It would equally positively affect the purchasing power of the poor thus contributing to world economic growth. Ethical economy and finance. In the course of the past weeks we have heard financial analysts and political leaders refer to the loss of trust. Financial stakeholders and politicians that are hurriedly rescuing the banking system ought to closely examine the various factors (that includes overshooting) that triggered this lack of trust. […] They ought to ask themselves whether the lack of a moral code could have triggered this lack of trust. Trust cannot be imposed: it collapses rapidly (as was the case), but it develops very slowly. Reintroducing trust in a financial and economic system entails the reconsideration of the finality and the priority of economic and financial intervention. What is the purpose of finance? What should its primary goal be? How do we wish to use resources, especially the rare ones (ecological questions)? […] Thus, ethical questions ought to recover a primary role in economic reflection. In order to step up this process, political leaders and civil society must raise public-awareness regarding the role played by morals as relates to political, economic and political decision-makers. Furthermore, citizens are all called to reconsider their own actions and introduce ethical behaviors in their lifestyles, in view of their individual and social responsibilities.