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

68 4 Insider Knowledge and Insider Trading
Instead, it is interesting to apply economic ethics to contentious issues because
grey zones, in which it is not clear from the outset what correct behavior is, can arise
even for people who set out with intentio recta, or good intentions. An entrepreneur
confronted with the problem of competing for a foreign contract against competitor
firms, all of which are resorting to bribery, faces a dilemma: not because he welcomes
corruption and wants to support it, but because for the sake of securing the
continuity of his business and the employment it provides, he may have no choice
but to adapt to some “sordid” practice in his sector, perhaps in relation to foreign
clients.
According to Messner, investment in shares or corporations which pursue
morally questionable production objectives are unethical. He cites the example of
investments by colonial corporations in firms which exploit the manpower of the
local people. 35
Another ethical issue in the field of investment is whether the investor should be
free to invest wherever in the world he likes. It should be mentioned in advance that
the global capital market should be as free as possible. From the ethical standpoint,
however, the investor is nevertheless obliged to ask himself whether the investment
should be made in his home country or abroad. Situations involving severe draining
of capital from one country to another, e.g. by elites in developing countries to
the centers in the industrialized world, raise the question of whether investors are
obliged to invest part of their capital in their own country on the grounds of justice. 36
This obligation cannot and should not be a legal one that is enforced by the state.
A law like that would have too many detrimental effects on economic efficiency. It
should, however, be an ethical obligation.
Although the holder of a few shares in a corporation has a very limited direct
influence on the policy of that corporation, shareholders have an obligation to find
out which projects, regions and countries the corporation in which they hold shares
is investing in. Messner also acknowledges a duty to invest; the duty to invest one’s
capital at rational risk rather than hoarding it. The hoarding of money and mere
amassing of wealth is not in keeping with the obligation to invest. 37
The ethical obligation of property is part of the German constitution, the Basic
Law (Grundgesetz). Art. 14 § 2 of the Basic Law states: “Property entails obligations.
Its use shall also serve the public good.” The “social obligations conferred by
property”, i.e. the duties of property owners towards society defined in this article,
35 MESSNER (1955), p. 426, and J. MESSNER: Das Naturrecht. Handbuch der Gesellschaftsethik,
Staatsethik und Wirtschaftsethik [Social Ethics: Natural Law], Berlin (Duncker & Humblot) 7th
edn. 1984, p. 1073ff.
36 From this it is possible to derive an obligation on the part of rich countries to invest in the
developing countries, in order to combat this capital drain and to minimize the great differentials
in capital stock within the global economy. Rohatyn emphasizes the necessity of a functional
capital market in developing countries as a precondition for attracting foreign investment. Cf. F.
ROHATYN: “World Capital: The Need and the Risks”, The New York Review of Books, Vol. 41, no.
13, 14 July 1994, pp. 48–53.
37 MESSNER (1955), p. 424.