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The financial crisis and ethical choices: Making the responsibility personal

In most of my own writing as well as in the writings of scholars seeking to understand the financial crisis, the trope of neoliberal governance offers a lens into the workings of the "free market" logic that played out in the financialization of global political economy, in the large scale inequalities across the globe, and in the dissolution of regulatory mechanisms to keep in check the behaviours of financial firms. This macro-level analysis offers a big picture, an understanding of the absence of government structures and processes that would keep in check the behaviours of financial organisations.

However, what this analysis does not do is offer an insight into the everyday workings of the people that inhabited  these transnational organisations, the values they embody, the goals in life they aspire toward and the meanings they make of their professions. The macro analysis also does not offer insights into the frames of reference through which the actors working in and for the financial institutions operate.

Take for instance the story of Harshad, an old friend of mine.

Harshad was an investment banker that worked for a financial organisation selling sub-prime mortgages and betting on them. For Harshad, success was embodied on his ability to sell risks and to do so with enough revenue generated for the financial organisation. The more risks Harshad took, the more successful he was considered to be. Success translated into the large bonuses and commissions he earned. Harshad lived the life!

So what made Harshad tick?

Harshad was hooked on the adrenalin rush of making it all up. He loved the game of selling the risks to clients, and in the process, generating large revenues for his organisation.

Once during the peak of the financial crisis, I spoke with Harshad. At this point, I was conducting an ethnography among newly homeless families in a midwestern town who had lost their homes in the face of the financial crisis. I shared one such story with Harshad and asked him, "Do you feel bad for the people who have lost everything in the wake of the financial crisis? What do you think is the ethical responsibility of the banks in taking ownership for these deliberate displacements?"

Harshad responded, "Come on Mohan, it is not as if these people did not know that they are taking the risk. You see the problem in the US is that people are too greedy. Everyone in the US wants to own a home, irrespective of whether they can afford it or not?"

I asked Harshad, "Do you think it is they who have lost homes after having worked so hard all these years that are greedy? Or do you think that the greedy ones are the investment bankers working in these transnational financial institutions that make a living out of making up fluff, deceiving people through frames of risk that are far removed from the real value of commodities?"

Harshad's response, "Wouldn't the same people have benefited if things went well? This is the casualty of risk, that's all."

What was most striking in our conversation was our fundamental difference in understanding corrupt practices within the realm of financial risks. To me, the practices of the financial institutions, the resale of mortgages and the accompanying risks at increasing interest rates are corrupt. This is corruption hidden into corporate jargon because at the end of the day the person taking the mortgage is not clearly informed. Moreover, the interest of the person taking out the mortgage is not the guiding factor. Rather, what makes up the entire process of selling risks is the ability to transform the risks into personal profits for the bankers.

And yet for Harshad, this was part of his professional role.

The conversation with Harshad offered important insights for me as an educator. What kinds of values regarding risk, money, finance, ownership and responsibility do we teach our students through our classes? How do we professionalize our students and do certain aspects of professionalisation become fronts for whitewashing corrupt behaviour?

A lesson from the financial crisis for pedagogy is the value of teaching that highlights ownership, encourages questions, and offers a space for turning inward to look closely at one's own behaviours and the consequences of these behaviours for others.

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