On the Atrophy of Moral Reasoning in the Global Financial Crisis

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The Global Financial Crisis - and its human toll - can be attributed to an atypical pandemic of morally sourced market failure. This paper develops a ‘moral bubble’ understanding of the sub-prime crisis, in which ethical decision-making by economic actors is marked by expediency and crowd effects. The paper revisits Adam Smith’s Theory of Moral Sentiments and shows Smith’s theory offers a helpful corrective to the ethical atrophy behind the recent credit crisis. The need to safeguard the 'soft' (moral) infrastructure of markets has significant implications for business decision-makers, for public policy, and for the role of Christian belief in society.

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