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MacIntyre on Money

There's an interesting, if occasionally heady, piece on the website of the British journal Prospect: a feature on Aladair MacIntyre and a recent lecture he gave on globalization and capitalism at Cambridge University.

When it comes to the money-men, MacIntyre applies his metaphysical approach with unrelenting rigour. There are skills, he argues, like being a good burglar, that are inimical to the virtues. Those engaged in financeparticularly money tradingare, in MacIntyres view, like good burglars. Teaching ethics to traders is as pointless as reading Aristotle to your dog. The better the trader, the more morally despicable.

The article notes that MacIntyre is an important influence on Phillip Blond, the "Red Tory" adviser to Britain's PM David Cameron.Read the piece here.

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I can't say I disagree with most of what MacIntyre says here, most of which he's either said before or is embryonic in his earlier work. I was struck more by the cluelessness of the writer, who natters about the "evident creativity" of finance capital, "evident" in the "positive effects of money creation" and the "use of derivates to offset risk." First, the writer apparently hasn't noticed that the "creativity" of finance capital is enabled precisely by the vices MacIntyre notes. (Not to mention that the creation of money out of thin air, as well as the creation of debt, was both enabled and made necessary for the last forty years by the stagnation of real wages. MacIntyre the Marxist would have remarked on this.)As for Philip the Blond and "Red Toryism," what a lot of rot. I've seen Blond in action: he's got the erudite, name-dropping Brit schtick down pat, and it beguiles a certain kind of conservative intellectual. But when you look closely at "Red Toryism" -- advocated also by the increasingly loony John Milbank, defender of imperialism and Constantinianism -- it's just petty-bourgeois, nostalgic banality about small business and "community." And he's not an important adviser to David Cameron -- Blond's "impact" is almost entirely self-advertised. And besides, Blond's been pretty much kicked to the curb anyway in the last six months. (Cameron's budget cuts are already causing social unrest -- witness the student demonstrations last week, almost entirely unnoticed by our allegedly liberal media.) MacIntyre is just another name to drop.

Very interesting article, thanks for the link.In the case of burglars, it seems clear (to me) that the skill involved is not burgling. The skills that make a good burglar (audacity, cool-headedness and quick thinking in a crisis, knowledge of locks, alarms and house structure) are equally applicable to less detrimental professions.In the case of finance, the case is not so clear, but similar. How is finance different from sports? In each, the definitive skill is to assess risk better than the other guy and use your insight to get an advantage over him. And the article suggests MacIntyre believes a football player is acting virtuously if he plays for the sake of attaining and displaying excellence, rather than for the money. So what's the difference? Can't a financier be acting virtuously if his object is excellence in his "sport." Isn't this what we mean when we call a lawyer "good" if he wins cases even when his client deserves to lose?Of course, finance often involves grievous loss to the loser. In sports, the losers are almost never profoundly devastated by a loss. An example is the young fellow in a recent NYT video, who is declaring bankruptcy because of credit card debt. The credit cards had a clause that his interest would be very low as long as he never missed a payment but increase very steeply if he ever did. Obviously, it was unethical of him to apply for the card; but it was worse for the company to offer it to him. But how is this essentially different from one player jumping higher, getting the ball into the basket and winning points for it?

One can certainly act virtuously for the sake of attaining and displaying excellence, while earning a living, simultaneously. One could argue that the beginning of our current crisis was the dot.com mentality on Wall Street, which resulted in private companies going public that had yet to make a profit, and the beanie baby mentality on Main Street. A system of money creation through the use of a fair value market is possible.

In the case of burglars, it seems clear (to me) that the skill involved is not burgling. The skills that make a good burglar (audacity, cool-headedness and quick thinking in a crisis, knowledge of locks, alarms and house structure) are equally applicable to less detrimental professions.You omitted the most important skill (also applicable to other professions) -- avoiding apprehension and punishment.

Felapton,On MacIntyre's view, the difference between the football player and the financier is that, while some football players may play for the money, making money is a good external to the game of football, whereas it is the raison d'etre of the financial "industry." It is, as you say, possible for individual financiers to do what they do mainly because they enjoy the activity of "managing risk" (that is, managing it onto the other guy), irrespective of what profit they or their firm make as a result. But their excellence, such as it is, makes sense only in terms of profit. For them, winning just is making a profit. It's possible for a professional football team to win games without making any money, and it's possible to play football, and play it well, nonprofessionally. Nor is the relationship between playing high school football and playing pro football anything like the relationship between, say, playing Monopoly and being a real-estate developer.

Macintyre is being a good Aristotelean when he says that money is intrinsically a only a means to an end. When one has no purpose for one's money, it has no real value, and to pursue it is the ultimate in irrationality. Some businessmen do, however, see the accumulation of money as a way of keeping score, enabling them to declare themselves the winner in the business game. Is it moral to play this game? I wonder. Also, the derivatives financiers activities do not produce a real product. They produce only more money. Can this be a moral "game"? Some make money to give it away to the needy. This, of course, is entirely different.

Treating finance like sport was part of the problem. You can do it as 'sport' if you are just playing with your own money. But you should not be 'playing' with other people's money.I am a fan of sports. Nevertheless, I think what professional sports has evolved into is actually a travesty of what sports should be. This goes for the whole 'entertainment' sector I guess.

I think there might be two things going on here.Regarding individual virtues, MacIntyre acknowledges in the preface of Whose Justice? Which Rationality? that the virtues must be unified in order to be complete. This is a reversal of his position in After Virtue. Virtues support each other and this would seem to make sense. Otherwise what would we make of the brave concentration camp guard? A very common source of personal moral blindness come in the form of people concentrating on the one or two virtues they may have in abundance and ignoring the others. But the virtues are whole and organic. There is no partial credit given.Regarding the trading of derivatives, derivatives are actually a form of insurance. At least this is how they begin. They are means of fixing prices for things in the present against some kind of change in the future. Commodity prices are fixed; people exchange variable interest rates for fixed interest rates, etc. A small percentage of derivative transactions are made by people who are trying to insure some underlying thing. Maybe it's corn, or a loan or an exchange rate. The vast vast majority of transactions are by people gambling that these hedges are wrong or unnecessary and are made by people trying to profit from this. On one hand, in order for these transactions to take place at all, there do have to be people willing to put up money to support the transaction who do not own the original commodity or loan (or financial instrument or whatever). And as it happens, the more people who enter the derivatives market, the smaller the price fluctuations and the more stable the prices are over time. So derivatives trading does have a true social function within capitalism, since capitalism could not exist (and capital for large investments could not be accumulated) unless there were many means of mitigating and spreading risk.But I think that MacIntyre recognizes that there is a problem when risks are hidden from people who are taking them up. When I put someone's assets in danger by transferring a risk to the person without their knowledge I am, in effect, stealing from them. It is an odd sort of theft, because I am sort of borrowing their money from them without their knowledge and I may bring it back with a profit or I may lose all of it. But the important thing is that because derivatives are attached to tangible objects (commodities) or tangible transactions (working loans) the risk may be invisible to the person buying the commodity, buying the house, or investing in the mutual fund. This is aggravated in a bubble economy when values begin to inflate. The price of the underlying object becomes inflated. For those holding the tangible object or transaction, there is a greater demand for "insurance". This fuels the market further. In the end, everyone is highly leveraged, which means that there is a lot of cash being supported by a relatively small collection of real things. When this collapses, those who don't have a lot of extra cash on the side or those who don't understand the risks well enough to get out in time lose.Our social understanding of how risks are spread in capitalism is so very primitive that when people emerge from the wreckage of something like this, they STILL don't know how it happened. In fact, many of the traders who caused this didn't really know about the risks they were transmitting to the rest of the economy. (When they say that they didn't do anything wrong they are not lying; they literally didn't know what they were doing.) The problem here (and I think it is a sort of problem for MacIntyre's position) is that while he is correct about the proper role of money, at least in regards to the virtues of transparency in transactions (which probably have to be more transparent for people to be able to see the real role of money in them) he seems to me to underestimate how essential the spreading of risk through the capitalist system is for the system to even exist. We are way past (by 150 years) the point where the system can survive without these complicated cash flows that attract all of these cash rich parasites. We can't just regulate these people somehow and get back to something more ethical and basic. What happened with the financial meltdown has become intrinsic to the system. It is the system, in effect. And perhaps the best we can do (and it would be a great deal) would be to try to begin to understand even how it works.

Sunil --"I was about to say, "Point well made, Sunil", then realized that talking about "making points" is sports talk. Can it be that making points in philosophical discussions is just as much a competitoin as the business man's attempt to make points against his competitor? Hmm.So I'll just say, yes, Sunil, excellent observation.

"A very common source of personal moral blindness come in the form of people concentrating on the one or two virtues they may have in abundance and ignoring the others. But the virtues are whole and organic. There is no partial credit given."Unagidon --I think this is true of the objective, non-private aspects of virtuous behavior. It does not take into cnsideration the subjective parts of moral behavior -- the consideration and choice of ends and means, and the activity of causing oneself to act for the end in the objective world. For instance, before Thanksgiving I consider what to make for the family dinner -- a nice pate' or a shrimp remoulade. I choose the remoulade and choose to the means, then choose to go to the grocery to get the ingredients, and to prepare them and put them together. The objective part is the going to the grocery and making the stuff. Unfortunately, since Anscombe's "Intention" emphasis has been place on the morality of the objective, non-private aspects. (She is thoroughly Wittgensteinian in that -- she totally abandoned Aquias, or maybe just didn't know him well at that point.)Anyway, it is possible for someone whose internal intentions are good to fail to act for objectively good ends. Such a person might even be more virtuous to Thomas than one who does the objective good for non-virtuous reasons. For instance, if a mother in the Amazon basin gives her chhild polluted water not knowing that it is bad water, her intention is nevertheless good and she is a good mother even though her child dies of cholera. ISTM the difference between subjective good and objective good is clear in such cases, and virtue also has both aspects -- the objective and subjective. I agree, however, that there is such a thing as choosing to be lopsidedly moral, and such choices are themselves unvirtuous. The problem becomes most acute, I think, when voting -- shall I vote for X, who is an adulterer and liar, or Y who always seems to intend what is good but doesn't possess the non-moral virtues (understanding of human nature, political forces, etc.) necessary for governing to the same degree as X -- for the flawed statesman or the saintly dummy?About derivatives --Sure, spreading risks has a social and economic value. But it seems to me that derivatives can be too simply overdone simply because as there are more pools of pools of risks the real risks become blurred by becoming more distant from the real products. (Though I guess you can call derivatives some sort of meta-product. Hmm.) I see that even as I type, Bank of America is in terrible trouble because it didn't really know what was happening on the ground with some mortgages it bought.You also say, : The vast vast majority of transactions are by people gambling that these hedges are wrong or unnecessary and are made by people trying to profit from this."I have a problem with two things here -- first the gambling with other people's money, though I suppose all stock market transactions by retirement funds do it all the time. It's the sheer amount of the systems absolute amount of capital that was invested in these de facto scams that is scary. My second problem is: how much of a system's capital should can be safely diverted to gambling on risks? Unfortunately, there doesn't seem to be any solid way to measure risks. This, as I understand it, was a fundamental principle of Keynes' theorizing: ultimately, risk cannot be measure accurately because the world is too complex.Yeah -- complexity, complexity.

"We cant just regulate these people somehow and get back to something more ethical and basic. What happened with the financial meltdown has become intrinsic to the system. It is the system, in effect. And perhaps the best we can do (and it would be a great deal) would be to try to begin to understand even how it works."It's true, I think, that many people think that not only is money the roof of all evil, there are people think that money itself is somehow evil and to be avoided, so let's not even think about how it works. ISTM that large part of the problem is that money works in more than one systems -- in the economic system it is a pledge or guarantee of goods and services (or something vaguely like that), but it is also a huge factor in social systems as a producer of feelings of security and as sign of superiority (for some, anyway). These non-economic motives complicate the economic system, even work against its success in some ways. As globalization makes the economic system even more complex, and therefore more scary, we really must get ahold of the complexity involved. Rescher, in his "Complexity: A Philosophical Overview" takes a rather optimistic theoretical stance about the possibility of our dealing the complexity problem. He's convinced that the intensification of complexity has an even theoretical inevitability, but that the modern and post-modern analyses of the world were both wrong. The moderns were wrong in thinking that everything is predetermined and, therefore, there is nothing we can do about the inevitable failures programmed into the world. The post-moderns, on the other hand, saw "a universe viewed as anarchic, irrational, and totally unruly beyond the grasp of rational comprehensibility". He particularly disparages the post-modern culture theorists who "almost invariably dwell lovingly on disorder, disharmony, and anarhy". (Ouch!)But not to despair -- " . . . recent science in every branch has been discovering and elaborating the natural mechanisms of order formation. (To be sure the "order" at issue lacks all of the neat simplifications to whicih modernists were attached. It is always an order which grows out of complexity and proceeds to exhibit complexities in its own right".Rescher doesn't point it out, but this world-view is a total reversal of the classic Western let's-reduce-our thinking-to-the-simple, the view that has dominated the West since the Greeks. The appreciation of complexity is an appreciation of differences, and it's truly revolutionary. I hope the economists catch on soon. The philosophers are finally starting to see the importance of the topic. Keynes' was waaaaaay ahead of his time.