Can a Good Person be a Good Trader? An Ethical Defense of Financial Trading
- 270 Downloads
In a 2015 article entitled “The Irrelevance of Ethics,” MacIntyre argues that acquiring the moral virtues would undermine someone’s capacity to be a good trader in the financial system and, conversely, that a proper training in the virtues of good trading directly militates against the acquisition of the moral virtues. In this paper, we reconsider MacIntyre’s rather damning indictment of financial trading, arguing that his negative assessment is overstated. The financial system is in fact more internally diverse and dynamic, and more reformable, than suggested by MacIntyre’s treatment. The challenge at the heart of MacIntyre’s claims can be crystallized in the question, “under which conditions, if any, can a person be an effective trader and simultaneously live a worthy human life?” We conclude that there are realistic possibilities of integrity and growth in moral virtue for those who work in the financial sector, at least for those operating in a work environment minimally permissive toward virtue, provided they possess characters of integrity and genuine aptitude for the skills and attitudes required in their professional tasks.
KeywordsFinance ethics Financial trading MacIntyre Virtue ethics Integrity
We wish to thank the editor and two reviewers for their diligent comments and feedback, which helped us refine and clarify important aspects of the argument. Likewise, we thank the participants in the conferences where we have presented the paper at different stages of its evolution : IV Colloquium on Christian Humanism in Economics and Business (Berlin, 25th October 2016), Society for Business Ethics Annual Conference (Atlanta, 5th August 2017), and the workshop on “New Ideas in Economic Justice” at the Manchester Centre for Political Theory annual meeting at University of Manchester (13th September 2017). We are also indebted to several financial practitioners for helpful and informative discussions of both ethical and technical aspects of our argument. Marta Rocchi gratefully acknowledges the financial support of the MCE Research Centre at the Pontifical University of the Holy Cross, the School of Economics and Business of the University of Navarra, and the Calihan Travel Grant provided by the Acton Institute. Finally, David Thunder is grateful for the support of a Ramón y Cajal research fellowship awarded by the Spanish Government (Grant Number RYC-2015-18808).
This study was partially funded by a Ramón y Cajal Research Fellowship, awarded by the Spanish Government (RYC-2015-18808).
Compliance with Ethical Standards
Conflicts of interests
Authors declare that they have no conflicts of interests.
This article does not contain any studies involving human participants or animals performed by either of the authors.
- Abbà, G. (1996). Quale impostazione per la filosofia morale?: Ricerche di filosofia morale. Roma: LAS, Libreria Ateneo Salesiano.Google Scholar
- Ahmed, A. (2012). The Hunch, the Pounce and the Kill. How Boaz Weinstein and Hedge Funds Outsmarted JPMorgan. The New York Times. Retrieved March 2017 from http://www.nytimes.com/2012/05/27/business/how-boaz-weinstein-and-hedge-funds-outsmarted-jpmorgan.html.
- Aristotle (1984). Nicomachean ethics. In J. Barnes (Ed.), The complete works of Aristotle: The revised oxford translation (6th ed., Vol. 2). Princeton: Princeton University Press.Google Scholar
- Bielskis, A., & Knight, K. (2015). Virtue and economy: Essays on morality and markets. Farnham: Ashgate.Google Scholar
- Boatright, J. R. (2014). Ethics in finance (3rd ed.). Somerset, NJ: Wiley Blackwell, Blackwell Pub.Google Scholar
- Brown, T. A., Sautter, J. A., Littvay, L., Sautter, A. C., & Bearnes, B. (2010). Ethics and personality: Empathy and narcissism as moderators of ethical decision making in business students. Journal of Education for Business, 85(4), 203–208. https://doi.org/10.1080/08832320903449501.CrossRefGoogle Scholar
- CFA Institute. (2014). Standards of practice handbook. CFA Institute. Retrieved from http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n4.1.
- Chase, JPM & Co. (2012). News release: JPMorgan Chase Reports First-Quarter 2012 Net Income of $5.4 Billion, or $1.31 Per Share. Retrieved October 2016 from https://www.jpmorganchase.com/corporate/investor-relations/document/1Q12_Earnings_Press_Release.pdf.
- Colom, E., & Rodríguez Luño, A. (2014). Chosen in Christ to Be Saint I: Fundamental moral theology. Roma: EDUSC.Google Scholar
- Dakers, M. (2016). JP Morgan’s “London Whale” trader breaks his silence. The Telegraph. Retrieved March 2017 from http://www.telegraph.co.uk/business/2016/02/23/jp-morgans-london-whale-trader-breaks-his-silence/.
- Dobson, J. (1997). Finance ethics: The rationality of virtue. Lanham, Md.: Rowman & Littlefield Publishers.Google Scholar
- Epstein, G. A. (Ed.). (2005). Financialization and the World Economy. Northampton, MA: Edward Elgar.Google Scholar
- Greenwood, R., & Scharfstein, D. S. (2012). How to make finance work. Harvard Business Review, 90(3), 104–110.Google Scholar
- Gregg, S. (2016). For God and profit: How banking and finance can serve the common good. New York City: The Crossroad Publishing Company.Google Scholar
- Harris, L. (2003). Trading and exchanges: Market microstructure for practitioners. Oxford; New York: Oxford University Press.Google Scholar
- Hull, J. (2012). Options, futures, and other derivatives (8th ed.). Boston: Prentice Hall.Google Scholar
- Luyendijk, J. (2015). Swimming with sharks: My journey into the world of bankers. London: Guardian Books.Google Scholar
- MacIntyre, A. C. (Ed.). (2006). Social structures and their threats to moral agency. In Selected essays (Vol. 2, pp. 186–204). Cambridge: Cambridge University Press.Google Scholar
- MacIntyre, A. C. (2007). After virtue: A study in moral theory (3rd ed.). Notre Dame: University of Notre Dame Press.Google Scholar
- MacIntyre, A. C. (2015). The irrelevance of ethics. In A. Bielskis & K. Knight (Eds.), Virtue and Economy (pp. 7–21). Farnham VT: Ashgate.Google Scholar
- Mauboussin, M. J., & Callahan, D. (2015). A long look at short-termism: Questioning the premise. Journal of Applied Corporate Finance, 27(3), 70–82.Google Scholar
- O’Hara, M. (2016). Something for nothing: Arbitrage and ethics on wall street. New York: W.W. Norton & Company.Google Scholar
- Roose, K. (2012). JPMorgan Names C.I.O. to Succeed Ina Drew. The New York Times. Retrieved October 2016 from https://dealbook.nytimes.com/2012/05/14/jpmorgan-names-new-c-i-o-to-replace-ina-drew/.
- Samuelson, P. A., & Nordhaus, W. D. (2010). Economics (19th ed.). New York: McGraw-Hill.Google Scholar
- Schumpeter. (2012). UBS’s Rogue Trader. Collective Responsibility. The Economist. Retrieved April 2017 from http://www.economist.com/blogs/schumpeter/2012/11/ubs’s-rogue-trader-0.
- Shiller, R. J. (2012). Finance and the good society. Princeton, N.J.: Princeton University Press.Google Scholar
- Silver-Greenberg, J., & Eavis, P. (2012). JPMorgan Discloses $2 Billion in Trading Losses. The New York Times. Retrieved March 2017 from https://dealbook.nytimes.com/2012/05/10/jpmorgan-discloses-significant-losses-in-trading-group/.
- Sison, A. J. G., Beabout, G. R., & Ferrero, I. (Eds.). (2017). Handbook of Virtue Ethics in Business and Management (1st ed., Vols. 1–2). Springer.Google Scholar
- U.S. Department of Treasury. (2013). Prohibitions and restrictions on proprietary trading and certain interests In, and relationships With, Hedge Funds and Private Equity Funds. Retrieved October 2016 from https://www.sec.gov/rules/final/2013/bhca-1.pdf.
- U.S. Securities and Exchange Commission. (2013). Insider trading—fast answers. Retrieved from https://www.sec.gov/fast-answers/answersinsiderhtm.html. Accessed 18 September 2017.
- Winnicot, D. W. (1964). The child, the family and the outside world. London: Pelican.Google Scholar
- Winnicot, D. W. (1971). Play and Reality. London: Tavistock.Google Scholar