Conscious Finance


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  • Most operate at the Problems level Increasing progression to systems For ethical behavior and to address our basic human condition, it is necessary to consider consciousness
  • Until the financial crisis in 2008, the over-riding belief was in neo-liberalism, in unfettered free markets, seen as rational and efficient Adair Turner, Chair of the Financial Services Authority: belief in unfettered markets was institutionalized and all pervasive. Across Govts, businesses, banks, and investors, all adopted this single point of view: a “simple, constant and clearly communicated ideology” of market efficiency and investor rationality leading to equilibrium, with no room or need for discretionary stabilization.
  • Philosophy vs. Mathematical modelling (being called to question) Contrary to Jean-Jacques Rousseau who believed that society enslaved humans to vanity and ambition ‘ Impartial spectator’: Wealth of Nations Wealth of Nations criticized British commercial policies and the hoarding of gold and silver. Followed François Quesnay’s (La Physiocratie) belief in the economy as a system of interacting parts, to be judged by the necessities and conveniences it produces, not the bullion it amasses (MJ: compare this to current focus on accumulating liquidity and paper wealth, rather than useful wealth)’’ Quesnay focussed on agriculture; Smith on trade and industry and labor Smith provided illustrations drawn from his various discussions; he knew that unless he entertained, he would not be read Jeremy Bentham, founder of utilitarianism; Hume also utilitarian and great friend of Adam Smith’s
  • Let’s look at the major driving force of our econ system: consumption In US, 70% of GDP, and Europe 60%. In China, 35% In order to reform Business and Finance, key questions have to be posed, such as: On the psychological level: Why do we consume? A prime objective is to obtain pleasure, but Roger Scruton (2000) describes these pleasures as “perpetually recurring illusions, which vanish at the very moment they loom into view.” Consumption is thus an ever frustrated desire. He sees consumption as fed by fantasy, which ‘penetrates and pollutes the world’ What is the underlying desire? Through what we consume, we portray an image to the world, an image that we hope will elicit admiration. The world of advertising plays very ably into this by highlighting the admiration for certain goods and services that are being promoted; by association, we are admired for possessing them. We can next pose the question: why do we desire admiration? Can the answer be a search for love, the deepest fulfilment of the human being? We cannot consume without money. Is then money a corruption of love? Irving Singer argued that love sets the ground for our attribution to meaning in life and the human creation of value (2009). He explored the plurality of love and did not see its transcendental potential; however, he acknowledged its centrality in human life. Luc Ferry, the French philosopher believes the next coming revolution will be that of love, as expounded in his latest book La Révolution de l’Amour: Une Spiritualité Laique
  • The ethical vision is demanding. Are we as humans up to it?
  • Jean-Jacques Rousseau believed that society enslaved humans to vanity and ambition Freud: we can call the 20 th century the century of the self But what about the 21 st century? Is this when we reconnect again to the universe and see ourselves as part of it?
  • We have seen the role of dialogue, of communication via language, to form behavior
  • Many neuroscientists expound the importance of reflection Without reflection, there can be no wisdom Middle Ages: no knowledge is possible w/o both ratio and intellectus Thomas Aquinas, married Aristotle’s teachings with Christianity. See Alasdair MacIntyre, who promoted Thomism and Aristotle’s telos (nature or purpose), life goals Phillip Blond, Cameron’s Red Tory guru, and US policy wonk, Lew Daly, influenced by MacIntyre MacIntyre shares Aristotle’s and Thomas Aquinas view of money’s value as simply a value of exchange for goods bought, no more, no less
  • Language, concepts, exchange, reflection (or the lack thereof) determine society Our society is defined primarily by the ego and consumption How will a shift in our ‘language’ cause society to change? If we increasingly discuss the concept of empathy, universality and love, how will our society change? Victor Hugo Anthony Giddens’ quote implies we all have a role to play in forming society
  • First bank started by monks in Italy – Monte Paschei de Siena (still exists)
  • INET Anthropologists: Gillian Tett, Karen Ho
  • Not profit driven, but purpose driven
  • Ethics/morality is not imposed, but generated from an internalized desire Past: ‘moralistic’ seen as curbing individual freedom: My liberty begins where the other’s ends. Today. Ethics as seen by Ricoeur: My liberty exists because of the other
  • Conscious Finance

    1. 1. IFF San Francisco Nov. 17, 2010 MARIA PEREIRA Conscious Finance
    2. 2. Interconnecting Levels of Perception
    3. 3. Outline of Project <ul><li>Part I – Laying the Framework: Philosophical Thought, Social Norms and Recent Developments in Neuroscience </li></ul><ul><li>Part II – Creating the Framework: How the Financial Paradigm Can Evolve with an Increase in Human Consciousness </li></ul>
    4. 4. The Financial Paradigm <ul><li>Neo-liberalism: institutional blind faith in unfettered markets led to crisis </li></ul><ul><li>Political response: legislation </li></ul><ul><li>And yet... </li></ul><ul><li>“ We can’t legislate wisdom or passion. All we can do is create the structures and hope that good people will be appointed who will attract other good people.” </li></ul><ul><li>(C Dodd, NYT, July 16, 2010) </li></ul>
    5. 5. Incorporating philosophy into the financial/economic discourse <ul><li>Subjectivity vs. Objectivity </li></ul><ul><li>Adam Smith </li></ul><ul><ul><li>Adopted as father of market liberalism: The Wealth of Nations </li></ul></ul><ul><ul><li>And yet, believed in human capacity for ‘sympathy’ and societal predisposition for human goodness: The Theory of Moral Sentiments </li></ul></ul><ul><ul><li>A utilitarian: </li></ul></ul><ul><li>“ the greatest happiness for the greatest number” </li></ul>
    6. 6. Why do we consume? <ul><li>Pleasure </li></ul><ul><li>Desire </li></ul><ul><li>Love </li></ul><ul><li>Irving Singer </li></ul><ul><li>Luc Ferry: </li></ul><ul><li>The Revolution of Love: Spirituality for the Laity (2010) </li></ul>
    7. 7. What kind of society do we want? <ul><li>“ Commercialization of modern eating away at the very heart of social life, not merely by putting salesmanship in place of moral virtue, but by putting everything – virtue included – on sale.” </li></ul><ul><li>“ The ethical vision safeguards social sense to our lives. But it is demanding.” </li></ul><ul><li>Roger Scruton (2000) Modern Culture </li></ul>
    8. 8. What type of person are we? <ul><li>Egoistic </li></ul><ul><ul><li>Enlightenment </li></ul></ul><ul><ul><li>Freud </li></ul></ul><ul><li>Compassionate </li></ul><ul><ul><li>Auguste Comte: no self-interest can rival universal love </li></ul></ul><ul><ul><li>Jeremy Rifkind: biosphere empathy </li></ul></ul><ul><ul><li>Teilhard de Chardin: evolution of consciousness </li></ul></ul><ul><ul><li>Luc Ferry: revolution of love </li></ul></ul>
    9. 9. Findings in Neuroscience <ul><li>Martin Hoffman </li></ul><ul><li>Jean-Pierre Changeux / Paul Ricoeur </li></ul><ul><li>Antonio Damasio </li></ul><ul><li>Francisco Varela </li></ul>
    10. 10. Role of Language <ul><li>“ the thinking life” </li></ul><ul><li>“ Language and cognition are deeply intertwined.” (Jackendoff) </li></ul><ul><li>“ Language is a sophisticated mechanism for expressing empathic communication.” (Arbib) </li></ul><ul><li>What is the current economic/financial language? </li></ul>
    11. 11. Importance of Reflection <ul><li>Discussion of reflection in neuroscience </li></ul><ul><li>Middle Ages: no knowledge is complete without both </li></ul><ul><ul><li>Ratio: discursive, logical thought </li></ul></ul><ul><ul><li>Intellectus: intuitive understanding of the truth, arrived at through contemplation </li></ul></ul><ul><ul><li>“ It is necessary for the perfection of human society that there should be men who devote their lives to contemplation.” (Thomas Aquinas) </li></ul></ul>
    12. 12. Theory of Society <ul><li>“ History is but a succession of changes.” (Victor Hugo) </li></ul><ul><li>Homeostatic loops: causal factors which have a feedback effect in system reproduction, where that feedback is largely the outcome of unintended consequences </li></ul><ul><li>“ Human history is created by intentional activities but not an intended project.” (Anthony Giddens) </li></ul>
    13. 13. Marcuse: civilization as a movement from barbarism Barbarism Civilization Immediate satisfaction Delayed satisfaction Pleasure Restraint of pleasure Joy (play) Toil (work) Receptiveness Productiveness Absence of repression Security
    14. 14. Discussion: Part I <ul><li>Incorporating philosophy into economics: subjectivity vs. objectivity </li></ul><ul><li>Why do we consume? </li></ul><ul><li>What kind of society do we want? </li></ul><ul><li>How is the human person? </li></ul><ul><li>Findings in neuroscience </li></ul><ul><li>Language </li></ul><ul><li>Reflection </li></ul><ul><li>From empathy to ethics </li></ul><ul><li>Theory of society </li></ul>
    15. 15. Part II: Creating the new financial paradigm <ul><li>What drives the financial apparatus? </li></ul><ul><li>A review of the history of finance and its evolution </li></ul><ul><li>A brief analysis of the interaction of human behavior and the financial system </li></ul><ul><li>A proposal for necessary financial reform – relating it to philosophical thought, social behavior, recent developments in neuroscience, and increasing consciousness and empathy </li></ul><ul><li>Building the future: the importance of education, reflection and ethics to ensure financial and social harmony. </li></ul>
    16. 16. G20 Meeting, Seoul, Nov. 2010 <ul><li>“ I kind of feel like I’m living in parallel Korea I feel...warmth...and the sense of trying to have a dialogue...but then when I get back to my real universe, it’s cold in that universe.” Vikram Pandit, CEO Citigroup </li></ul><ul><li>“ There needs to be a mind shift away from making money to earning money in the proper sense.” Angela Merkel </li></ul>
    17. 17. Review of the evolution of finance <ul><li>What is the role of money? </li></ul><ul><li>Oikonomia </li></ul><ul><li>What is the human role in society? </li></ul><ul><li>Homo economicus? </li></ul><ul><li>Homo empaticus? </li></ul><ul><li>Integrated homo? </li></ul>
    18. 18. What caused market failure? <ul><li>Blind faith in unfettered markets: </li></ul><ul><li>“ a simple, constant and clearly communicated ideology of market efficiency and investor rationality leading to equilibrium” (Adair Turner) </li></ul><ul><li>Human behavior: </li></ul><ul><li>“ today’s financial crisis is, at heart, a crisis of trust, a loss of confidence in counterparties and regulators” (Onora O’Neill) </li></ul>
    19. 19. Prerequisites of financial reform <ul><li>Root causes of breakdown must be addressed: </li></ul><ul><ul><li>Addiction to growth </li></ul></ul><ul><ul><li>Resource constraints (financial and ecological) </li></ul></ul><ul><ul><li>Consumption paradigm: from what is happiness derived? </li></ul></ul><ul><ul><li>Financial modeling and speculation </li></ul></ul><ul><li>Expanded metrics and regulation cannot solve problem </li></ul><ul><li>Trust and responsibility must be restored </li></ul><ul><li>Ethical invesment is not an asset class, but an all pervasive requirement </li></ul>
    20. 20. Building the future <ul><li>Education </li></ul><ul><li>Reflection </li></ul><ul><li>Virtue derived from within </li></ul><ul><li>Ethics stemming from empathy </li></ul><ul><ul><li>“ the self like the other” (Paul Ricoeur) </li></ul></ul><ul><li>Community </li></ul>
    21. 21. Discussion: Part II <ul><li>Role of money </li></ul><ul><li>Root causes of necessary financial reform </li></ul><ul><li>Human causes of market failure </li></ul><ul><li>Metrics </li></ul><ul><li>Restoration of trust: virtue and ethics </li></ul><ul><li>Building the future </li></ul>