Culture Won’t Be Fixed With Morals

When politicians, financial commentators, and senior bankers speak conscientiously about their determination to tackle “bank culture” problems, everybody should start to worry.

Corporate culture may be changed -- by management -- in an organization. In contrast, the big problems faced today are sectoral and societal, i.e. lying in areas where the special manager-employee relationship ceases to be relevant. The hard issues stretch across and between economies. Market economies are systems, and systems are the antithesis of organization. By all means enjoin managers to set to work recreating their organization’s culture or ethos if it does any good. With few honorable exceptions, however, managers are likely to do so beneficially only if governments perform their primary function which is to supply incentives -- rewards and punishments -- that make public and private organizations compete honestly for survival in free market places for the loyalty of consumers and voters.

The fervent commitment to change bank culture is a reminder that for at least two decades there was a comforting association of high culture and high finance in high brow media and arts. A simple turn of a newspaper page elides corporate finance into personal finance into the operas, galleries, and theatre productions that were both privately sponsored and publicly subsidized. Today, talk of reforming “bank culture” is a nervous initiative in the teeth of possible criminal proceedings. 

Contrition about “bad apples”, regret for having allowed “standards” to slip, and grim undertakings to “restore moral integrity” suggest, without saying so, “we are civilized people”. It is theatre in the best tradition. But it is drama that belongs in parliament or courtroom rather than the pulpit, bear pit, or orchestra pit.