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

10 1 Ethical Economy, Economic Ethics, Business Ethics: Foundations of Finance Ethics
Because firms are central institutions and actors of the economy, it can be helpful
to group the norms of the firm’s legal structure and the norms governing action
within the institutions known as “firms” or “corporations” under the umbrella term
of “corporate ethics”.
Ethical economy is the general integration of economic theory and ethical theory,
and is thus the foundation of economic ethics and corporate ethics. It lays the
groundwork for business ethics in the sense of “economic ethics” (Wirtschaftsethik),
meaning the institutional ethics of the economy and of the economic system as well
as its constitutional framework and implications, and the legal norms of an industry
and of corporate law. It also provides the basis for business ethics in the sense
of “corporate ethics” (Unternehmensethik), meaning the applied ethics of the firm’s
management. If a purely economic theory of the economy were valid, there would
be no place for business ethics because mere self-interest would bring about market
equilibrium or the economic optimum, even without recourse to ethics, by virtue
of the invisible hand of the market. In a purely economic model, ethics would be
utterly superfluous. Ethical economy theory can show that this assumption is incorrect
because a market with ethically-oriented market participants, e.g. with a will
to honor contracts regardless of whether they are reinforced with sanctions, leads
to a better market outcome than a market without any ethical orientation, since it
creates space for the possibility of an applied ethical theory of the economy and of
corporate management.
The firm or the organization of the firm is a possible subject and object of corporate
ethics, and the economy as a whole or its industries are the subject and object
Ethik und persönliche Verantwortung [Corporate strategy, ethics and personal responsibility],
Frankfurt a. M. (Campus) 1991; ROBERT C. SOLOMON: Ethics and Excellence: Cooperation
and Integrity in Business, New York (McGraw Hill) 1993; HORST STEINMANN, ALBERT
LÖHR: “Einleitung: Grundfragen und Problembestände einer Unternehmensethik,” [Introduction:
Fundamental questions and problems in corporate ethics] in: HORST STEINMANN, ALBERT
LÖHR:. (eds.): Unternehmensethik [Corporate ethics], Stuttgart (Poeschel) 2nd edn. 1991,
pp. 3–32. HORST STEINMANN,ALBERT LÖHR: Grundlagen der Unternehmensethik [Foundations
of corporate ethics]. Stuttgart: (Poeschel) 1991, 2nd edn. 1994; PATRICIA PEILL-SCHOELLER:
Interkulturelles Management [Intercultural management], Berlin, New York (Springer) 1994;
KLAUS M. LEISINGER: Unternehmensethik. Globale Verantwortung und modernes Management
[Corporate ethics. Global responsibility and modern management], Munich (C. H. Beck) 1997;
ANNETTE KLEINFELD: Persona oeconomica: Personalität als Ansatz der Unternehmensethik
[Personality as an approach in corporate ethics], Heidelberg (Physica) 1998; SONJA GRABNER-
KRÄUTER: Die Ethisierung des Unternehmens: ein Beitrag zum wirtschaftsethischen Diskurs
[The ethicalization of the firm: A contribution to the business ethics discourse], Wiesbaden
(Th. Gabler) 1998; BETTINA PALAZZO: Interkulturelle Unternehmensethik: deutsche und
amerikansiche Modelle im Vergleich [Intercultural corporate ethics: German and American models
compared], Wiesbaden (Th. Gabler) 2000, repr.2001; JOSEPH F. JOHNSTON: “NaturalLawand
the Fiduciary Duties of Business Managers”; and P. KOSLOWSKI: “The Common Good of the Firm
as the Fiduciary Duty of the Manager”, both in: NICHOLAS CAPALDI (ed.): Business and Religion:
A Clash of Civilizations?, Salem, MA (M&M Scrivener Press) 2005, pp. 279–300 and 301–312;
LAURA P. HARTMAN: Perspectives in Business Ethics, New York (McGraw Hill) 2004; MANUEL
G. VELASQUEZ: Business Ethics. Concepts and Cases, Upper Saddle River, NJ (Prentice Hall) 6th
edn. 2005.