Two crises: financial and moral
The current financial crisis is also a moral and ethical crisis. Michael Smith says the current crisis is a result of separating capitalism from conscience.
For one thing, Smith says, many people have heard of Adam Smith's "invisible hand" but very few of us remember that he was more than an economist, he was a moral philosopher.
Never has a financial crisis focused so starkly on moral, ethical and even spiritual issues. The words used by commentators have run the gamut of emotions: greed, dishonesty and fear, panic replacing confidence, risk and hubris versus prudence, and faith in the banking system or lack of it. Never have the virtues of trust and integrity been more needed in the global economy.......those who are driven solely by the profit motive and “the love of money”, described by St Paul as “the root of all evil”, are discovering that security based on material wealth is an illusion. A curious weakness of human nature says that the more we have, the more we still want. When Rockefeller was asked “How much is enough?” he is said to have replied, “Just a little more”. Yet the roots of security and satisfaction lie elsewhere, not in amassing wealth but in seeking the divine purpose for our lives....
...As Stephen Young, of the Caux Round Table group of business executives, argues in his book Moral Capitalism, the separation of Smith’s two texts has given us a distorted notion of how capitalism should work.
Capitalism cannot be separated from conscience and even a divine providence, a guiding hand. For without conscience, without the “invisible hand” of divine grace, untamed capitalism too easily leads to corruption — and to the greed and dishonesty, the loss of humanity and common sense, that we have recently seen in the financial markets. To rescue capitalism and the banking system, we need to revisit Adam Smith’s moral philosophy — and our own consciences.
hat tip to Thinking Anglicans.
Yes, Adam Smith recognized the downside to greed and saw business persons as flawed, just as he saw all of as flawed. A major concern for Smith was the use of government to create monopolies and to otherwise protect businesses from competition, foreign and domestic.
It's probably not wise to speculate too much about what Smith might have thought about today's crisis. I do think he would ask, what's the alternative to market system? And he would probably remind us not to forget that market systems, for all their flaws have proven superior -- in the sense of the freedom and well being of all -- to other systems with heavy government intervention.
Finally, there is something of a myth developing that the crisis was due to greed in the financial sector. factcheck.org has good investigation which ends with the conclusion that we have met the enemy and it is us.
http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html
(be sure to check last section -- "The Real Deal")
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November 12, 2008 12:36 PM