Morality and the Economic Downturn, Part 2

To what extent has the recent failure of our global economic system been a moral failure?

The BBC asks that question in an article here.

It is noted that if you think at first glance that capitalism itself is immoral, you need to remember that the "invisible hand" idea is meant to show that in capitalism there is reward made to those who satisfy the interests of others.

"Wall Street is always motivated by profit, but unfortunately everybody thinks that capitalism is the problem," he says, pointing to how the essential root of capitalism is to reward those who do something that will help others.

But what actually happened in the credit crisis? And was what went wrong a matter of immoral decisions and actions?

Joe Saluzzi says the cause of the current crisis was giving loans to people who didn't qualify, who had no documentation, and no income that could support a mortgage.

"And the reason banks did lend was because they were packing up the risks and selling them off to Wall Street," he says.

"If people become too dependent on loans or are unqualified, the system is wrong and is not going to work," adds Dr Rishi Das.

I'm still not seeing a moral violation. At least not as the BBC reporter is presenting it.

"Everybody is guilty here of trying to make an extra dime and squeeze an extra bit of profit," he says.

Again, that just sounds like the profit motive essential to capitalism. What we are looking for is a moral violation in the pursuit of that profit. Some act of unfairness or harm.

Now, on the other hand, maybe there is more to morality than violations of autonomy (harm) and violations of fairness. The people the BBC interviewed seem to think so. In an earlier post, we discussed the work of Jonathan Haidt, a psychologist who has studied the psychology of moral judgment. He finds that a small population of the world thinks that only violations of autonomy and fairness count as moral violations, and the rest of the world agrees with that while also finding violations of Community, Purity, and Authority to be moral violations.

Globalisation has given us insight into the lives of different people, but it has failed to make us appreciate that we are all connected, she believes.

"The culture of greed has created an individualism, selfishness - a society looking for compensation - a society we don't want to live in."

These seem to be violations of Community, as the psychologist Jonathan Haidt would categorize them.

Does is make sense that capitalism (and the individualism inherent in the profit motive postulation) would work well for cultures with only the Harm and Fairness moral pillars and work not so well in cultures will all five pillars?