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The Worthless Value System of the Financial Branch

by Julia Friedrichs Thursday, Dec. 22, 2011 at 7:48 AM

The Nobel Prize winner Milton Friedman wrote: "In a free economic system, there is only a single responsibility for the actors. Businesses must be carried out for the greatest possible profitability." To believers in the self-healing market, questions about guilt, humility and pangs of conscience must sound like questions from another world.


Banks and Markets must Recall Their Social Responsibility

By Julia Friedrichs

[This article published on 10/21/2011 is translated from the German on the Internet,]

After the Lehman bankruptcy, the financial branch fell into a kind of shock for a short moment. Then the investment bankers and financial jugglers returned to “business as usual.” They forget that they are playing with our money.

In 2010 the banks of Wall Street poured out more than 0 billion in bonuses. The head of the British Barclay’s Bank, Bob Diamond, says the time of pangs of conscience is now over. Alexander Dibelius, German director of the Goldman Sachs investment bank, is still “convinced that investment banks benefit the whole society.”

How can this continue? one could ask. This is one of the most irritating and paralyzing consequences of the financial crisis. The banking branch mostly trivializes this refusal of blame and responsibility. Their shock only lasted a short while after the near-total crash following the Lehman bankruptcy. At that time many thought the “rulers-of-the-world” mystique was over. The bailed out branch would be more modest and more humble. That was a tremendous mistake.

For two hours I wrestled with a leading member of Deutsche Bank over whether he and his colleagues made wrong moves, whether they had responsibility for the crisis and whether they should have acted differently. His mantra was: “Large parts of the branch are doing a responsible job, did a responsible job in the past and will do this in the future.” My questions were simplistic, he complained. Then he escaped in a metaphor: I imagine a mountain lake that the financial world symbolizes, a lake with cold clear water. “If you now add a drop of oil, that changes the quality of your mountain lake,” he said. Only a drop of oil does this, nothing more.

In my research on the Cayman Islands, one of the most notorious tax havens, the interviewed always shrugged their shoulders when I asked about responsibility and the damage that creations like th3ese tax evasions inflicted on whole states. We are only doing a job, they replied, and asked me to call the islands “tax-neutral,” not “tax havens.”

It is as though they lived in their own world, severed from the values and rage of everyone else. They are children of a canon of faith preached since the 1980s that knows two commands. One is the sentence coined by Margaret Thatcher, one of the mothers of neoliberalism: “society does not exist.” The second command comes from the Nobel Prize winner Milton Freedman: “In a free economic system, there is only a single responsibility for the actors,” he wrote. “Capital must reap the highest profit. Businesses must be carried out for the greatest possible profitability.”

To whoever adheres to this faith, the belief that a community does not exist and that profit is the only responsibility of the economy, questions about responsibility, humility and pangs of conscience must sound like questions from another world. This would not be a problem if the parallel world of the financial branch had its own money. But its money is the money of all of us.

After the Red-Green German government deregulated the financial markets, the call to tame them was heard everywhere. A higher capital holding requirement was demanded, a reform of the rating agencies, introduction of a transactions tax and separation of commercial and investment banks.

All this may be sensible. But hoping in laws alone would be a mistake. As long as their parallel world is constructed, the heroes of financial management will plead again that everything not prohibited must be allowed. Once again they will declare there cannot be responsibility for moral conduct in their branch. The Inquiry Commission of the US Congress identified greed as a trigger of the crisis. But “greed does not act,” a television journalist writes. There are greedy persons who make greedy decisions. We must remind them of this time and again.


“Final Report of the Inquiry Commission on the Financial Crisis,” January 2011, 576 pages

Video: “Final Report of the Inquiry Commission on the Financial Crisis,” Book TV, January 27, 2011, 1 hr 10 min

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