A possibility of alignment between ethics and finance

Enron Corporation was a world leader in power distribution. Located in Houston, Texas, it employed about 21,000 people. In the year of 2000, before filing for bankruptcy due to accounting fraud, Enron earned $ 101 billion. This is not the first and will not be the last case in which companies are involved in some kind of “unethical” question.

Companies such as Libor, Goldman, Wells Fargo and Barclays, as well as the Madoff scheme, have been parts of major scandals in the world over the last ten years. In Brazil, the “Lava à Jato” operation condemned more than 130 people in corruption scandals involving the country’s president and senior executives of private companies, for example.

Professor Alexander Wagner of the University of Zurich, Switzerland, one of every seven North American companies, commits fraud each year. As a result, there is a cost to both shareholders and society in general of US$ 380 billion per year. Still, it is important to note that six of these seven companies seek to “keep in line”.

The discussion about ethics and finance goes back decades and centuries. Aristotle, for example, has already discussed this subject. In the years that followed Aristotle, several other prominent philosophers sought to give their respective ideas on ethics and finance. Nowadays, MacIntyre stands out as one of the main names to describe about, especially from the perspective of virtues. In any case, it is an issue that has not yet been exhausted and needs more definitions given the market dynamics that the current society finds. Obviously, the relationship with money we have today is not defined in the same way as a century ago.

By Aristotle’s conception flourishing depends, on the one hand, on material goods, external or corporeal, and on the other hand of non-material or internal goods, such as goods or excellences of the soul, also known as virtues (Aristotle 1990: 1324a). Although both are equally necessary for flowering, material goods must be pursued only to the extent that they allow us to reach the non-material or spiritual (Ferrero and Sison, 2017, 1155).

In this sense, there is a limit to be established regarding material goods. Thus, for Aristotle material goods are only the means necessary to attain something greater, higher, like flourishing, a good life. That is, the search for material goods, money for the end in itself is not characterized by the Aristotelian approach as virtuous.

Ferrero and Sison (2017: 1155) describe that in relation to the limit, humans need a finite amount of money to satisfy physical or bodily needs and to attain flowering. So, in addition to that amount, more money can result in a hitch than an aid. More is not always better.

MacIntyre describes goods of effectiveness and goods of excellence. For MacIntyre the goods of effectiveness are those pursued for the benefit of others and are out of the agent, an example of this is money. Already the goods of excellence are chosen in themselves, achieved in activities whose purpose or purpose is their own realization in the best possible way. These are internal goods to practices, such as flourishing, loving relationships, listening to music, knowledge, and virtues.

Both goods of excellence and goods of effectiveness are defined in reference to practices and institutions according to MacIntyre. Practices are “any coherent and complex form of socially established cooperative human activity through which goods within this form of activity are realized in the course of trying to reach those standards of excellence that are appropriate and partly definitive to that form of activity” (MacIntyre 2007 [1981]: 175 apud Ferrero and Sison, 2017). In turn, “institutions are characteristically and necessarily preoccupied with […] external goods. They are involved in acquiring money and other material goods; they are structured in terms of power and status and distribute money, power and status as rewards “(MacIntyre 2007 [1981]: 194) apud Ferrero and Sison, 2017).

MacIntyre makes it clear that when agents seek goods of effectiveness such as money, status, and power in and of themselves, practices are distorted. (MacIntyre 1994: 289). This situation describes the loss of integrity or corruption of practices (MacIntyre 2007 [1981]: 195).

How can we apply these ideas on ethics given the current financial and economic marketplace where the complexity of institutional relationships is so dynamic?

The financial system according to Greenwood and Scharfstein (2012) is to promote savings, whether domestic or business, with the allocation of funds more productively. In addition, it distributes and manages risk among agents and facilitates a reliable payment system. Properly employed, financing promotes economic growth, promotes entrepreneurship, and promotes education (Zingales 2015). Now, it is clear that the financial and economic dynamics of today are different from earlier. The way that agents deal with resources, promote savings, and distribute risks are different. They are also necessary given the way society acts.

So, for example, financial activity consisting of pure speculation or income-seeking (Zingales 2015) would represent the corruption of a practice according to MacIntyre and an abuse of the use of material goods according to Aristotle. When we think of applying ethical questions in finance, Ferrero and Sison (2017), while relying on the idea of ​​Aristotle and MacIntyre, describe that:

“We could then venture an “internal good” for the financial activity of resource-allocation or investment consisting of its “best use,” different from what is simply its “most productive use.” Certainly, profits and productivity are reasonable indicators of the soundness of an investment, but they should not be the financier’s sole and prime objective. Ethical requirements have to be satisfied above all. Goods and services have to be “really useful,” not only because they satisfy consumer preferences, but also because they safeguard and promote human dignity, the common good and other fundamental social principles”.


Ferrero, I., & Sison, A. J. G. (2017). Aristotle and MacIntyre on the virtues in finance. In A. J. G. Sison (Ed.), Handbook of virtue ethics in business and management (Vol. 1–2, pp. 1153– 1162). Dordrecht: Springer.

MacIntyre A (2007 [1981]) After virtue, 3rd ed. Duckworth, London.

The views and opinions expressed in these articles are those of the authors and do not necessarily reflect the official policy or position of the AdmEthics Group.

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