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

178 10 Disturbance of the Invisible Hand
In the same way, it can be very awkward for banks’ compliance officers to have
to confront the management board with prospective critical warnings, evaluations
or even prohibitions, because the board wields the ultimate authority over their
position and determines how they must work. The consequence is that the banking
compliance, which should also exercise a critical and anticipatory function, is
generally confined to the question of conformity to rules, compliance with existing
legal norms, and is not required to comment on new financial instruments.
Another reason why the USA was able to push through the deregulation of
finance virtually unopposed in the global market was that the USA commands
opinion leadership, and indeed dominance, in the domain of economics and management
sciences. American scientific theories and approaches in economics and
the management sciences can be promulgated virtually unopposed. Approaches
from anywhere other than America are barely noticed because of the dominance
of American economics and its organs of publication. 49 What is missing is the
element of criticism and the presence of alternative approaches within scientific
theory-construction.
After the end of the Cold War, what Posner writes about Alan Greenspan is all
the more true of the most recent history of the USA and its economy: “The Duke of
Wellington remarked that a great victory is a great danger. Success breeds complacence.
Or as William Blake said, damn braces – bless relaxes. Greenspan’s triumphs
and laurels ill prepared him and his successor to confront a new crisis with fresh
thinking”. 50 The proverb that a great victory is a great danger applies just as much
to nations. Blake’s sentiment that “damn braces, bless relaxes” applies not just to the
head of the US Federal Reserve but also to the USA as the victor of the Cold War and
the sole remaining superpower after 1989. After 1989, there was virtually nobody
in the fields of financial management, financial scholarship and financial legislation
who contradicted the USA. Germany, in particular, did not fulfill its role as a place
of independent institution-building, theory-construction and legislation during these
years. Nothing was done to enhance the international financial system’s efficiency
and learning capacity in the years after 1989.
This experience shows that laws, rules and customs of the international financial
system have another side, which can be described as dogmatic. The factual and
dogmatic validity of rules is half manifest and half normative. If US institutions
dominate because they are backed by the largest law community and the greatest
economic and political power, the theories that underpin US law gain dogmatic
significance. They become a self-fulfilling prophecy for the rules of international
business. They are valid because they are valid in the vast majority of business
transactions. This dogmatic side of international business law, which is largely determined
by American law, is unavoidable to a certain extent. Nevertheless, it remains
49 Cf. STARBATTY (2008), p. 12: “Anything that has no chance of being published in American
journals is brushed aside.” (Own translation) Starbatty views this phenomenon as one cause of the
crisis in the discipline of economics as a whole.
50 POSNER (2009), p. 282.