The New Coming of Ethics

It is symptomatic of our times that discussion about the morals of society and those of its citizens and organizations has grown to unprecedented dimensions. This is so much true also in our little bird nest called Finland. Along with the recent rash statements of Nordea’s Björn Wahlroos and the muddle around the property deal of Finnair CEO Mika Vehviläinen’s residence, also broader issues of responsibility and moral backbone, such as in the context of the European debt crisis, have raised ethical questions into the focus of social debate. What are the underlying factors behind this debate? In an interview in the latest Talouselämä magazine on 24 February, Minister for International Development Heidi Hautala gives us a clue, saying “we must seek solutions that are acceptable to the common sense of justice”. People in Finland and all over the world are getting fed up with the way small cliques look after their own interests. The indignation awakened by Wahlroos’ statements is first and foremost a moral resentment: instead of the common good, people in high positions have their own personal interests at heart.

The debt crisis of Greece and Europe as a whole can also be seen as a moral crisis. First, the Greek elite pushed the national economy into debt by grabbing perks for itself, thereby triggering a European crisis. Now it seems the international community is losing patience with Europe: in his Financial Times blog last weekend, Mohamed El-Erian, chief executive of PIMCO, the world’s largest investment management firm, says it is “unfortunate” the European debt crisis is taking up well over one half of the outstanding loans of the IMF.

The pursuit of self-interest, hailed by Wahlroos in the Helsingin Sanomat interview, has led to an economic and ethical crisis. It has brought the world of finance to a point where the liquidity produced by the derivatives market grew a ten-fold relative to the gross world product prior to the current financial crisis. In connection with the Greek debt negotiations, for example, this has led to a situation where it is very difficult to negotiate with hedge funds, because they have bought bonds for purely speculative reasons.

Fuelled by insatiable greed, speculative financial economy has led to diminishing trust in the market. Trust is the glue that keeps the elements of the world economy together. Bill Gross, perhaps the most prestigious bond fund manager in the world who invests exclusively in non-speculative stocks, has predicted that we are undergoing a shift into ‘paranormal’ economics characterized by muted growth, high unemployment and delevering, because market actors do not trust one another.

The financial crisis teaches a lesson in ethics to the society at large and its elites in particular. I am hoping this means ethical discussion will deepen and develop new forms. Transparency, moral backbone and pursuit of the common good might then become the hardest currency of all.

The only good thing about the current crisis is that it makes visible the values that truly steer the way our societies and economies are managed. We may hope that it will help us create an ethically more conscious society.

Markku Wilenius Professor of Futures Research Helsinki