The Ethics of Banking: Conclusions from the Financial Crisis (Issues ...

176 10 Disturbance of the Invisible Hand
principles of the Anglo-American and continental European concepts of the market
economy. The common goal should be a new synthesis of economic systems and a
new and better business legislation and business ethics, not a micro-managed system
of regulation and supervision. To this end, what is needed is not a new Big Bang
consisting of re-regulation and a totally new corporate order for the finance industry,
but an evolution of capitalism and its financial system.
In the kingdom of theory, there can be no hegemony except the hegemony of the
better argument. The better argument is neither always nor never on the side of the
strongest and mightiest actor in the given discourse. It is not always on the side of the
American or Washington Consensus, as the crisis shows; but nor is it never on the
side of this Consensus. Which side has the best argument is contingent upon which
argument is the best, not on the greater or lesser power of the argument’s proponent.
The Failure of Economics and Management Science
Much has been written about the incapability of economics and management sciences
to foresee the crisis or warn that it was coming, let alone prevent it. 46 Two
elements of this incapability to recognize the crisis come to the fore: firstly, the academics’
difficulty in keeping pace with the development of financial instruments
within financial institutions, and secondly, the academics’ lack of critical distance
towards the financial institutions. On the first point: the pace of financial innovations,
and the sometimes hermetic way in which they were introduced, made it
difficult for the academic world to become familiar with these new instruments at
the time and to critically probe them and to examine their risks. It is not in the interests
of the financial institutions that introduce financial innovations to have them
audited by independent and public researchers, because this could undermine their
competitive advantage as an innovator. For this reason, it seems advisable to set
up a state authority which examines new financial instruments, like the authority
that assesses and approves new drugs, but which is strictly bound to maintain confidentiality
and protect the intellectual property rights to the innovation. That way,
financial instruments capable of such far-reaching damage as CDOs would never
have been introduced, or at least their worst impacts could have been abated.
On the second point of the academics’ lack of independence, particularly that
of corporate finance experts from their partners in the financial industry: the development
of academic disciplines leads the universities into ever-greater dependency
on external funding and external donors. This steadily erodes the “public” character
of academic research and steadily shrinks the critical distance of disciplines from
their object of study. Added to this, in the case of economics, is the development of
business schools, which are even more dependent on corporate patrons and tuition
46 Cf. JOACHIM STARBATTY: “Warum die Ökonomen versagt haben” [Why the economists failed],
Frankfurter Allgemeine Zeitung, 4 November 2008, No. 258, p. 12.