There is no doubt that the global financial and economic crisis has shaken the current economic system thoroughly and also disclosed several weaknesses of business and economic ethics. We can learn three lessons from the crisis:
The dominant individualistic business philosophy went bankrupt. The view that the strict pursuit of self-interest of economic actors would lead to the public well-being (or common good) has failed. As we now know, a representative of this view was Alan Greenspan, chairman of the Federal Reserve. For many decades, he was a convinced adherent of the libertarian philosophy of Ayn Rand (1905-1982), who preached the virtue of selfishness or the “ethical egoism” (Rand 1964). In a Congressional hearing on Oct. 23, 2008, however, Greenspan acknowledged that his individualistic philosophy was wrong and that for this reason he was so deeply shocked by the financial crisis (see Wessel 2009, especially 65-66). In face of the global financial crisis, only the public actions of governments were able to save the economy from falling into the abyss.
Perhaps the shock of the crisis was necessary in order to learn anew that the public well-being is more than the aggregation of the well-beings of individuals; further, more than the motivation of self-interest is required to preserve and promote the public well-being. Most ethical theories have advocated a balance of private and public well-being. But the experience of the crisis has demonstrated again quite bluntly that the strict pursuit of self-interest necessarily leads to the decline and fall of business and society. For this reason business and economic ethics should engage much more intensively in explaining and promoting public interests, public goods and public services.
The view of business as being free of value judgments is an illusion. Decision making and taking action in business always involve – explicitly or implicitly – ethical values (be they positive or negative). It also turned out that both widespread ethical skepticism and ethical relativism failed, claiming, respectively, that we can’t say anything reasonable about the ethics of business and corporations, and that no universal ethical standards exist. After the crisis, it is hardly possible to defend the view that ethics does not or should not have an important place in business and economics. By the way, ethical relativism recently has also been criticized by philosophers such as Jürgen Habermas and religious leaders including Pope Benedict XVI in his encyclical Caritas in Veritate (2009). Of course, the rejection of ethical relativism still leaves many questions open as to what the right ethical answers are.
As a result of this increased ethical awareness, it is hard to shield business and corporations from questions of ethics and moral responsibility. Positively speaking, one can learn anew to take these ethical questions seriously, to actually practice integrity, and to effectively take on responsibility.
The exclusive concentration on short-term goals (or “short-termism”), particularly in the finance sector, is blind for longer-term goals and entails catastrophic consequences for business and society. It follows for business and economic ethics that securing the long-term perspective is of paramount importance. This is certainly true for the finance sector. But it is also crucial for health care and education, the budget of the government, environmental policy, and many other areas, as well as the sustainability of business, the economy and society (see Enderle 2009).
Benedict XVI. 2009 . Caritas in Veritate.
Enderle, G. 2009. A Rich Concept of Wealth Creation beyond Profit Maximization and Adding Value. Journal of Business Ethics, 2009, 84, Supplement 3, 281-295.
Rand, A. 1964. The Virtue of Selfishness. A New Concept of Egoism. New York: Signet.
Wessel, A. 2009. In Fed We Trust. Ben Bernanke’s War on the Great Panic. New York: Random House.