Worldviews in Religious Education
RE is under threat. This report interprets and develops the idea of “worldview” and explores its implications for the classroom. (2020)
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The collapse in Deutsche Bank’s share price this week was just the latest instalment of the chaos caused by the banks which brought about the global financial crisis. The bankers responsible for that crisis were described by Australian Prime Minister Kevin Rudd, in a speech on 8 October 2008, as the “the 21st century children of Gordon Gekko”. Gekko was the ruthless corporate raider played by Michael Douglas in the film Wall Street. His “children” were a generation of highly paid, mostly white, males who grew up admiring Gekko’s ruthlessness, his lack of hypocrisy about his motives, and, perhaps above all, the money he made.
Gekko’s slogan, “Greed … is good”, achieved cultural dominance through the power of education and example. The Chicago School of Economics argued that the invisible hand of the market will deliver outcomes that are good for most people most of the time even if some people are acting selfishly and disregarding the interests of others. Milton Friedman taught that managers’ only social responsibility was to make as much money for their shareholders as possible. Generation of short-term profit, regardless of the interests of customers, became the key objective for banks and other big businesses. The lawyer Anthony Salz found “the culture that emerged tended to favour transactions over relationships, the short term over sustainability, and financial over other business purposes.”
The new culture also gave rise to a narrative of the ‘masculine autonomous self’ – the self-interested, self-sustaining individual who had forgotten their social responsibilities and their social interdependence. Pay, promotion and prestige were all dependent on performance in making money, at all costs. The old-fashioned bank manager symbolised by Captain Mainwaring in Dad’s Army served his community, whether behind his desk at the bank or when organising the Home Guard. Gordon Gekko lived for himself, both in the office and away from it.
The result of the Chicago School’s teachings, the changed culture in banks, and the self-image of the successful banker manifested itself in a variety of harmful behaviours – of which the mis-selling of Payment Protection Insurance (PPI) to consumers who did not need it, interest rate hedging products to small businesses without proper explanation, and the manipulation of LIBOR are amongst the most egregious examples. How far things had fallen was brutally exposed when Bob Diamond, the CEO of Barclays, was unable to name any of the three principles of its Quaker founders, when asked to do so by John Mann MP in 2012. Honesty, integrity and plain dealing all seemed to have become wholly alien concepts.
Where were the law-makers while all of this was happening? As financial products and services became ever more complex, so the laws regulating them grew and grew. The result was that neither the bankers nor the regulators themselves could see the wood for the trees.
The last 30 years has been an experiment in attempting to control a business sector by focussing on laws and neglecting questions of character and culture. The experiment has been a comprehensive failure. The urgent question is how can a culture of values be rebuilt once it has been lost. The antidote to the banking scandals we have witnessed lies in four “E”s: Education, Empathy, Example and Enforcement:
Education: because virtues have to be taught. The virtues required of bankers need to be taught in Universities, in induction and training courses at banks and repeated following each promotion.
Empathy: because, as Adam Smith understood, to the extent that we allow our capacity for sympathy and our desire for friendship to inform our understanding of our self-interest, we grow in wisdom and learn to control our selfishness and greed. Finance should be understood as a service industry, one whose value and profitability lie in the quality of the services it provides to companies, individuals and public institutions.
Example: because, as Adam Smith also realised, our self-interest includes a strong desire for approbation or esteem. Bankers need to see that those who try to do the right thing are promoted and rewarded. The tone that is set at the top of a bank is a signal to the lower levels of the bank about what the Bank really values, and how much of a price it is prepared to pay to live up to its rhetoric.
Enforcement: because banks need to hold their staff accountable to high standards. Regulators cannot be expected to see everything or act on everything but if those who cheat their customers are dismissed, and those who build long-term relationships are promoted, then others will copy their example.
Laws alone will not prevent harmful behaviour in the financial sector. Wrongful actions became endemic in banks because of dangerous ideas which led to irresponsibility, because of the pursuit of short-term profit regardless of the risks and costs, and because the heroes who were applauded were those who were greedy and selfish. Re-building trust in banking will require education which places character at the heart of leadership and actions, a return to the idea that banks are there to serve their customers, structures of reward and promotion which do more than measure short-term profit-making, and institutions which are committed to policing their own values rather than focussing on ticking the boxes.
David McIlroy is a Barrister and Visiting Professor of Banking Law, SOAS, University of London. The arguments in this blog are explored in greater detail in ‘From Captain Mainwaring to Gordon Gekko: Why bankers need to be a law unto themselves’ which is published in Crucible in October 2016
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