Global Financial Institutions, Ethics and Market Fundamentalism

  • Seumas Miller


The global financial crisis (GFC) sparked by the collapse of the investment bank Lehman Brothers has entered a new phase, namely that of sovereign debt. It is not simply investment banks and other financial institutions that are insolvent or bankrupt and in need of government bailouts, it is now whole economies that are actually or potentially insolvent and in need of bailouts by other governments and/or organisations such as the IMF. Most recently, Greece has made the headlines and there is media speculation and market jitters in relation to Ireland, Portugal and Spain. Moreover, this all comes in the wake of the sovereign debt crises very recently faced by Iceland and Dubai. As with the first phase, the crisis has been revealed to have been due in large part to gross financial over-leveraging, regulatory negligence (e.g., of German banks) and a host of other unethical practices such as, in effect, ‘cooking the books’ in the case of the Greek government. Moreover, this new phase is related to the first, in that a significant increase in sovereign debt has been incurred as a consequence of bailing out failed or failing financial institutions to the tune of trillions of dollars. This ongoing GFC is evidently the worst since the Great Depression, and the second phase is in some respects more alarming than the first, given that while governments typically can bail out banks, it is unclear whether ultimately they can or are willing to bail out other governments.


Social Institution Hedge Fund Profit Maximisation Market Actor Private Equity 
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  1. 1.
    An earlier version of some of the material in this section appeared in Seumas Miller, ‘Financial Service Providers, Reputation and the Virtuous Triangle’, in I. MacNeil and J. O’Brien (eds), The Future of Financial Regulation, Oxford: Hart, 2010, pp. 387–400.Google Scholar
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  4. 3.
    Peter C. Fusaro and Ross M. Miller, What Went Wrong at Enron, New York: John Wiley & Sons, 2002.Google Scholar
  5. 4.
    See Seumas Miller, ‘Corruption’, Stanford Encyclopedia of Philosophy, Winter 2005 for an account of corruption and its divergence (at times) from illegality.Google Scholar
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    Frank Clarke, Graeme Dean and Kyle Oliver argue as much in Corporate Collapse: Accounting, Regulatory and Ethical Failure, Cambridge University Press, 2003 (revised edition).Google Scholar
  7. 6.
    See, e.g., Trevor Sykes, The Bold Riders, Sydney: Allen & Unwin, 1984.Google Scholar
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    Seumas Miller, ‘Institutions, Integrity Systems and Market Actors’, in J. O’Brien (ed.), Private Equity, Corporate Governance and the Dynamics of Capital Market Regulation, London: Imperial College of London Press, 2007.Google Scholar
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    For the developed version of the material in this section, see Seumas Miller, The Moral Foundations of Social Institutions: A Philosophical Study, New York: Cambridge University Press, 2010. Some of the material in this section is drawn from that volume.Google Scholar
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    Jonathan Turner, The Institutional Order, New York: Longman, 1997, p. 6.Google Scholar
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    The following teleological model of social institutions is elaborated in more detail in Seumas Miller, Social Action: A Teleological Account, Cambridge University Press, 2010. See also his ‘Social Institutions’, Stanford Encylopedia of Philosophy, Winter 2006.Google Scholar
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    The Australian Consumer and Competition Commission, for example, is concerned among other things with the traditional professions, but appears to place little or no focus on the distinctive ethical ends of the traditional professions, such as legal practitioners, as compared with other occupational groups. See Andrew Alexandra and Seumas Miller, Professionalisation, Ethics and Integrity Systems: The Promotion of Professional Ethical Standards, and the Protection of Clients and Consumers, Report for the Professional Standards Council of Australia, December 2006. Incidentally, I am not here necessarily blaming regulators; they can only carry out the tasks governments give them.Google Scholar
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© Seumas Miller 2011

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  • Seumas Miller

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