Ethics and finance

Following the financial crash, the Icelandic government set up a special investigation commission to look into the ethical aspects of the collapse. This was a unique exercise. A meeting with the president of this commission, Vilhjálmur Árnason, professor of philosophy at the University of Iceland.

“The financial crisis of 2008 was on an unprecedented scale. Iceland‘s three biggest banks went bust. It was more than a financial crisis, it was the collapse of the economic system” explains Vilhjálmur Árnason, adding, “the country‘s debt, held mainly by the banks, reached almost 10,000 billion Icelandic krona, ten times the country‘s GDP. This is a world record, both in relative and absolute terms”.

The commission, appointed by the Icelandic parliament and made up of two philosophers and a historian, delivered its report in April 2010. It was a much awaited report and hugely successful. “Our commission’s task was not to limit our analysis of ethics and work practices to the banking world, but to set it in a wider social context. It was not a question of making judgments, but of analysing why this greedy behaviour – and it was greed that we were dealing with – was possible.”

The utrasarvikingar

It was therefore an analysis of Icelandic society that the investigating commission performed. “Icelandic society is strange; there are not very many of us and in many ways we are a nepotistic society”, points out the philosopher, before continuing: “In our report, we highlighted a crucial event which took place at the turn of the century, namely the privatisation of banks. This privatisation was accompanied by a relaxation of financial regulations.”

“The politicians are responsible for this state of affairs and the banks are responsible for having engaged in very risky operations. At the time, the risk was perceived as an advantage and the young bankers as modern Vikings, or utrasarvikingar. The media also lacked critical thinking. Their weakness is that the majority belong – with the exception of State radio and TV – to financial groups.”

“Before the crisis, there was a relationship of ‘trust’ between the politicians and economists. In fact, this trust was a lack of impersonal professional distance. Maybe Iceland still needs to move towards a civil society!”

Vilhjálmur Árnason’s main concern is the rhetoric used by the ultra-nationalists who present the Icelanders, “once the great conquerors in the golden years, as being bullied by the institutions and unfriendly countries”. “I am more saddened by the way that Iceland is managing the after-crisis than the crisis itself. We are exploiting people‘s weakness rather than strengthening the democratic system. Clearly, a lot of people made mistakes, but the most important thing we must remember is that the democratic institutions failed to foresee the crisis.”  

EU membership? “This is something great and I am also saddened that the crisis is being used by those who are against Iceland‘s entry into the European club, diverting people from their responsibilities.”

M.M.B.