Friday, May 30, 2008

Confucianism, Economics and Finance

The Wall Street Journal has run a 3-part article about the collapse of Bear Stearns, a large investment bank (the articles ran on Tuesday May 27, 2008, May 28, and May 29). That reminded me that Confucianism has traditionally been concerned with the physical welfare of the people, as I mentioned in my New Confucian blog, Nov. 29, 2007.

In this Timeless Way blog, on Dec. 4, 2007, I discussed of moral behavior on Wall Street. Of course, moral behavior is very important to Confucians, but traditionally Confucians have stayed away from trade and commerce.

On Dec. 23, 2007, I mentioned that ancient Confucian discourses on the Salt and Iron debates and the Well-field system of agriculture show Confucians have always had an appreciation for the impact of economics on the peoples prosperity.

On Jan. 18, 2008, I mentioned the Confucian scholar Yan Yuan (a.k.a. Yan Xizhai, 1635 - 1704) discussed finance, labor and risk management.

In 2000, Dr. Wei-Bin Zhang published On Adam Smith and Confucius, the Theory of Moral Sentiments and the Analects, ISBN 1-56072-765-9 (Nova Science Publishers, Commack, New York).

So for thousands of years there has been a recognition by Confucian scholars of the importance of economics, but economics has always been a small topic within Confucianism. I think it should take on more importance.

Consider in addition to the collapse of Bear Stearns, the collapse of the investment bank Drexel Burnham Lambert and the hedge fund Long Term Capital Management. These investment banks and hedge funds do not get the press coverage that Enron, WorldCom, and Arthur Andersen got, but they all form a picture of an American financial system teetering on the edge of complete collapse due to incompetent leadership.

Confucians need to take their interests in ethics, leadership, and the prosperity of the people, connect it with a love of scholarship, and direct this interest to the real world of Wall Street Finance.

If the American financial system suffers a complete breakdown, which can happen, the entire world economy would sink and people around the world would suffer. Too many leaders in finance have developed moral blindness as a by-product of unbridled greed.

Confucians can and should bring the light of morality back into Wall Street.


PS, the Wall Street Journal article I mentioned in the beginning was titled, "Lost Opportunities Haunt Final Days of Bear Stearns" by Kate Kelly

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