Is Finance immoral?
- 19 June 2012
I have no interest in justifying the amoral – and frequently illegal –behavior of bankers and traders, but neither do I want to attack them with a psychiatric diagnosis. That is a perverse use of professional expertise. More important, it is inaccurate and unhelpful.
As a psychologist who frequently works as a coach and advisor to traders, I know the pressures they are under to deliver profits in a highly competitive and fast moving industry. And, yes, they do occasionally slip and behave badly. But in that, frankly, they are no worse than the rest of us, as has been demonstrated in frequent studies that track the influence of groups and authorities on individual behavior.
It is a systemic issue, not an individual one. Money is amoral. Capital craves growth. In an age of "Investor Capitalism," where we are all invested, the firms that respond to the demands for growth are vying against other firms and often against their own past performance. And the stakes are large. They are supposed to be guided by systems to control for risk, but the organizations that design such systems are really more worried about losing out on the competition than making mistakes. That's what they see. That's what they talk about, and that is how their judgment gets clouded.
It is a dysfunctional system. To be sure, individuals in it are frequently impulsive, driven, with short attention spans, and often fearful of failure. That makes them more than usually vulnerable to external pressure. In the heat of trading, they lose perspective.
But if we think in terms of paedophilia, criminals and psychopathy, we lose sight of individual responsibility and motivation, and we deprive ourselves of the tools that might reform the system.
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