Governing Board of the European Baha’i Business Forum (EBBF). 2009-06. “An Ethical Perspective on Today’s Economic Crisis: A statement from the European Baha’i Business Forum.”

“The world is passing through an economic and financial crisis unprecedented in modern times. Its global scope transcends the cyclical adjustments of national economies and the corrective instruments usually used by business and national governments. The general malaise and loss of confidence point to deeper issues and more fundamental flaws in the economic system, extending to a crisis of leadership and values. This unprecedented crisis, together with its accompanying social breakdown, reflects a profound error of conception about human nature itself. We are being shown that, unless the development of society finds a purpose beyond the mere amelioration of material conditions, it will fail to attain even this goal. That purpose must be sought in spiritual dimensions of life and motivation that transcend a constantly changing economic landscape and an artificially imposed division of human societies into “developed” and “developing”. The European Baha’i Business Forum recognizes in this situation an opportunity to reshape the fundamental concepts and structures that will not only lift us from this crisis but set us on a road towards a new set of institutions and behaviours which will enable humankind to prosper. As the present crisis is fundamentally one of trust and integrity, and therefore ethical in its foundation, its solution cannot be a mere institutional reorganization or some additional regulatory measures. It needs an ethical response at all levels: the individual, the corporation and the government and regulatory entities. There is no quick fix to this situation. Several principles must be considered while reshaping our thinking on institutions and the individuals that compose them. We need to replace the concept of self-centred materialism with that of service to humanity, competition with cooperation, corruption with ethical behaviour, sexism with gender balance, more authoritarian legislation with personal ethics, national regulation with international supervision, protectionism with world unity, and injustice with justice. EBBF promotes and welcomes engagement with the widest possible community to develop together the new framework. Given the importance of the business community in the world, we should draw on its special capabilities and resources, in collaboration with governments, international organizations and NGOs, to design the institutional framework and the guiding principles of the new economic system. We call on peoples from all businesses, countries, and walks of life to work together to build a new economic system based upon equity and justice (EBBF 2009-06).”

Who’s Who

“EBBF is a network of over 400 women and men, a community of people passionate about bringing ethical values, personal virtues and moral leadership into their workplaces. Its membership is diverse and crosses generations, borders, sectors and beliefs. It began in 1990 and is now present in over 60 countries. EBBF’s vision is to enhance the well-being and prosperity of humankind. It believes that positively influencing the world of business, starting from the inspiration of action by each of its members, is an important step in this direction (EBBF 2009-06).”

Notes

“EBBF promotes seven core values that it feels are of strategic importance in enhancing business performance: Business Ethics, Corporate Social Responsibility (CSR), Sustainable Development, Partnership of Women and Men, A New Paradigm of Work, Consultation in Decision-Making, Values-Based Leadership (EBBF 2009-06).”

Webliography

Governing Board of the European Baha’i Business Forum (EBBF). 2009-06. “An Ethical Perspective on Today’s Economic Crisis: A statement from the European Baha’i Business Forum.” Chambery, France.

More state intervention through laws and regulations: the future of financial intruments as mortgage-meltdown reveals high cost of unfettered markets. The US heads towards recession, shares plungs, oil prices have reached a $120 peak, gold a $1000, OPEC spurns US call for more oil production, activist shareholders call for more transparency and accountability of CEOs, but complex financial instruments used by hedge funds and private equity funds that operate outside of regulation, continue to create more wealth for the wealthy. Wealth disparities intensify as hedge funds and private equity funds skim off the cream of global markets by operating from tax-free offshore locations using everything from emotions, gut feelings, intuition, chaos theory and complex financial algorithms (based on variables, outcomes and values that might be realized in the future and money that is more cyber that really real. These financial institutions with their rhizome-like roots have permeated practically every aspect of our economic lives through our pensions, mortgages and investments. They have create havoc in the economies of nation states and lower quintile households. They gamble big and lose big. When their losses cause the inevitable domino effect, nation states and citizens are forced to cover their losses to prevent the worst. The financial crisis has been triggered by the invisible hand impatient for higher returns, controlled not by a law of nature, human or otherwise, but by an insatiable addiction to a money game. Law makers and regulators from the state and the market are calling a halt.

Bajaj, Vikas. 2008. “Mortgage Defaults Reach a New High.” New York Times. March 6, 2008.

Other related New York Times stories:

  • Bush and Fed Step Toward a Mortgage Rescue (March 5, 2008)
  • Bundled Mortgages and Dubious Fees Complicate Foreclosure Cases (March 4, 2008)
  • Spitzer to Present a Plan to Reduce Foreclosures (March 4, 2008)
  • Other related stories:  

    Acharya, A., H. Almeida, and M. Campello, 2006, “Is cash negative debt? A hedging perspective on corporate financial policies.” Journal of Financial Intermediation.

    Bates, Thomas W.; Kahle, Kathleen M.; Stulz, René M. 2007. “Why do U.S. firms hold so much more cash than they used to?”  (October 2007). Fisher College of Business Working Paper No. 2007-03-006 Available at SSRN: http://ssrn.com/abstract=927962

    Dittmar, A., and J. Mahrt-Smith. 2007. “Corporate governance and the value of cash holdings.” Journal of Financial Economics 83, 599-634.

    Johnston, Megan. 2007. “Whatcha doin’ with all that cash?: Summer money scramble to be one hot topic at AFP confab.” Financial Week. October 22, 2007.

    McDonald, Ian. 2006. “Cash Dilemma: How to Spend It.” Wall Street Journal. May 24, 2006. p. C3. McDonald, Ian. 2006. Capital Pains: Big Cash Hoards.” Wall Street Journal. July 21, 2006. p. C1. Polczer, Shaun. 2008. Scientific investor finds predictability in chaos: Check your emotions before acting.” Calgary Herald. March 04, 2008.

  • Relief for Homeowners Is Given to a Relative Few (March 4, 2008) 
  • Walter Zimmerman, principal partner in New York-based United Energy brokers, applies chaos theory to commodity markets. ” Chaos theory is not based on chaos but on the theory that extremely complex phenomena, like the market, have underlying hidden patterns that can be revealed by delving deeply to glean predictive information about that which was seemingly chaotic. He bases his market predictions on the assumption that markets are reflections of human nature and that both are unchanging, both are more emotional than logical, and that behavioural patterns of human nature/herd instinct/the market will be repeated over time. He advises his clients, the bigger oil producers in Calgary to hedge production against high commodity values (oil at $120 a barrel). If the economy continues to unravel, oil prices will correct lower to about $70 or $80.  He argues that governments cannot fight a recession and inflation at the same time. Cutting interest rates to fight recession leads to inflation and fighting inflation depresses economic activity. Summary of (Polczer 2008-03-04).

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