“Exploring the Contribution of Virtue Ethics to the Financial Crisis Discourse”
Dr. Aliza Racelis
To some people, the world of finance and business is purely mechanical, devoid of ethical considerations. But it has become quite obvious, given the most recent financial crisis alone, that there is no escaping the fact that ethical reasoning is vital to the practice of business and finance (Racelis, 2013). The material and psychological harm caused by the 2008 global financial crisis continues. As various actors —those deemed responsible, the victims, the reformers, etc. — cover the fallout from the financial crisis, a wide variety of symptoms or origins are offered: from unbridled greed, to complete financial deregulation, to the perverse effects of the incentives systems, among others (Rajan, 2005; Münchau, 2010; Koslowski, 2011). The appeal of greed as a causal variable in the economic crisis may stem from its suitability for crafting an engrossing economic narrative. Abstract formulations of the economy or politics, where mishaps and wrongdoings are attributed to systemic failures, can tend to absolve individuals of their responsibility. Greed on the other hand is popularly understood as a personal moral choice and, thus, correctly shifts the spotlight to the individual (Vedwan, 2009).
In the context of the recent economic crises, finance ethicists have begun emphasizing that the focus should be on virtues and the qualities of the practitioner. There is accumulating evidence that the attribution of causes of behavior is significantly affected by cultural norms and values; this line of research seeks the causes of individual behavior and attitudes not in a person’s particular organizational or social environment but rather in the individual’s own personality or dispositions. Virtue ethics is situated within this ethical framework of investigating the individual person and his dispositions. Virtue ethics is a type of ethical theory in which the notion of virtue or good character plays a central role; it can provide guidance for action and illuminate moral dilemmas. Whereas the attention to consequences or duty is fundamentally a focus on compliance, it is believed that one should also consider whether an action is consistent with being a virtuous person (Hursthouse, 1999; Pfeffer, 1997; Bruner, Eades and Schill, 2009).
The current work is an extension of an earlier empirical virtue ethics study done by the author, which consisted of a survey of 141 Philippine managers, and revealed the following as the observed character traits of the superiors of the respondents: care and concern, competence, ambition, and superiority. The current work elicited the managerial traits viewed as desirable. The following are the resulting desirable managerial virtues among superiors: (a) honesty; (b) innovativeness; (c) competence; (d) kind-heartedness; (e) security, and (f) self-confidence. These results seem compatible with existing studies of preferred traits, like those of Boen (2010) and Lickona (1993). For instance, Boen’s survey revealed the following as the top three desirable character traits: (a) Respect, (b) Responsibility, and (c) Honesty.
The paper discusses the usefulness of the empirical results for both creating a greater awareness of virtues and virtue ethics among finance professionals and businessmen, and contributing to a moral framing of the discourse on the economic crises. Apart from highlighting the great interest in ethics ―and specifically in the ethics of the virtues― that the recent crises have aroused, the paper likewise sheds light on the proper ethical understanding of such terms as prudential regulation, practical wisdom, morally good corporate governance, and the like.
The approach of the paper has been exploratory, in that it has sought to corroborate the reality that there is a need to continuously debate ethics and values (Racelis, 2010). It points to several areas for future investigation, such as the demand made on business and finance to show that the possession of the elicited desirable character traits or virtues leads to ―or at least is correlated with― successful organizational performance (financial or otherwise).
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