October 1, 2008

Freedom, Ethics and the U.S Financial Crisis

Hazel Henderson is an Advisory Board Member for Kosmos Journal, author of Ethical Markets: Growing the Green Economy (2007) and president of Ethical Markets Media which takes an integral approach to market research and business consulting.

Here is her recent essay on the current U.S and global financial crisis:

Trendspotting: Chicago Boys Curse Comes Home to Wall Street

By Hazel Henderson

The famous school of economics at the University of Chicago led by the late Milton Friedman spread its market fundamentalism worldwide. Greed, selfishness, individualism and short-termism were conflated with freedom and democracy and elevated to the status of moral philosophy. The fatal flaws of this ideology fueled the reckless risk-taking, greed and arrogance that led to Wall Street’s downfall.

The Chicago Boys and their clones stormed through Latin America in the 1950s, led the triumphant forces of capitalism to victory in the Cold War and sparked the Reagan and Thatcher era and the Washington Consensus of deregulation, privatization driving today’s form of economic globalization. The roots of market fundamentalism, which stem from Adam Smith’s Wealth of Nations (1776) while ignoring his Theory of Moral Sentiments (1759, 1790) and from the Austrian School of Ludwig Von Mises, Friedrich Hayek and others, became the ideological basis of US libertarianism and the neoconservatives’ revival in the George W. Bush administration.

Elevating individual freedom and free markets to a higher moral status than community responsibility and the role of government helped destroy the excesses of communism and Stalinism. Yet, this lure of “rugged individualism,” making money in markets free of regulation, also drove the narrow calculus of Milton Friedman’s famous single bottom line: the only purpose of private enterprise and corporations is to make as much money as possible for shareholders. Academics created “free market” curricula, and business schools reaped grants from corporations and from conservative and gullible liberal foundations. Media joined in promoting the “animal spirits” of individual entrepreneurs, the glorification of business leaders and the “wealth” of Wall Street raiders, hedge fund titans and private equity kings. Money was seen as the only form of wealth.

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