Section 5.8 poses the question of whether the process of corruption of the practice of banking, described there as breaking down or loss of goods and purposes, amounts also to moral corruption. First it might be helpful to say what is not intended here by the phrase ‘moral corruption’. For corruption the Oxford Dictionary of English (2010) gives as usage 1, ‘dishonest or fraudulent conduct by those in power, typically
involving bribery’. It is not in this or similar common language senses that the phrase moral corruption is used here. Rather, the intention is to explore what the process of corruption might mean for a practice in the context of virtue ethics and more specifically as used by MacIntyre in After Virtue. There he refers to practices resisting (or not) ‘the
43 One participant makes the point that full due diligence was impossible in the context of a hostile takeover (C6: 120), but of course the point remains that the Chief Executive in question had to judge in the first place the wisdom of a hostile takeover at this time, on this scale and so
corrupting power of institutions’ (MacIntyre, 2007, p.194). But it is not only practices which can be corrupted in the absence of virtue:
‘The virtues find their point and purpose not only in sustaining those
relationships necessary if the variety of goods internal to practices are to be achieved and not only in sustaining the form of an individual life in which that individual may seek out his or her good as the good of his or her whole life, but also in sustaining those traditions which provide both practices and individual lives with their necessary historical context. Lack of justice, lack of truthfulness, lack of courage, lack of the relevant intellectual virtues — these corrupt traditions, just as they do those institutions and practices which derive their life from the traditions of which they are the
contemporary embodiments.’ (MacIntyre, 2007, p.223)
The meaning of corruption
Without overstating the case, we might perhaps say that insofar as it makes sense to talk about institutions and practices being part of a single causal order, it makes sense to speak of practices and institutions also forming a causal order together with
traditions, at least in respect of the causes of moral corruption. We can say that any or all of these three elements can be subject to corruption and that the root cause of such corruption is vice or the lack of virtue. Further, we can say that the corrupting influence of vice on a practice, institution or tradition is an opposite movement from the influence of virtue which is to sustain their integrity (MacIntyre, 2007). This returns us to the original characterisation of corruption given at 5.8 as loss or breakage, and we can perhaps firm up here a notion of moral corruption in an institution, practice or tradition as the loss of integrity of a social system such that the coherence between its goods and virtues is dissolved.
If this description is anywhere near the mark, we can note several features. Integrity here pertains to a social system, applicable at the level of practices or traditions, but not at the level of the individual; a similar concept would also be applicable at the individual level, but we are not directly concerned with it here. For a system to lose integrity, it must have integrity in the first place. If a social activity has never had coherence of the relevant kind, then it cannot be corrupted: thieving might be an example, as indeed might shopping. But this requirement of coherence must be less strong than the requirement for something to count as a practice. The social
convention of gift giving at Christmas can hardly count as a practice in MacIntyre’s sense, but it still could have, or could have had at one time, coherence of the relevant kind, and it makes perfectly good sense to debate whether it is a convention which has been corrupted. Lastly, this idea of corruption places some weight on the idea of coherence between goods and virtues.
Is Scottish banking a corrupted practice in this sense? It seems patent from the argument so far that the integrity of goods and virtues which was apparent in old banking, as I have called it, has been lost. This is not only clear from the discussions above throughout Chapters 4, 5 and 6, but it is directly evident in the language of those participants most closely associated with old banking, who continually talk in terms of fragmentation and loss of skills (C5: 93), virtues (C3: 63), relationships (C5: 101), respect (C8: 144), qualifications (C1: 2), standards (C1: 5) and so on. More interesting questions arise once the fact of corruption is recognised, the first of which might be:
What does it imply, to say that banking in Scotland is a corrupted practice?
Consequences and causes
The implications in the case of Scottish banking are far reaching. The practice of old banking in Scotland has largely disappeared, or at least has been so marginalised that it is no longer a feature of mainstream high street and commercial banking in Scotland.
The institutions have also changed radically, and it was institutional pressure which changed the practice, so that we have to consider the corruption of the practice and its institutions together with the tradition of banking in Scotland as elements of the same causal system. So we are presented with the question of the corruption not just of the practice but also of the tradition and its institutions.
What corruption implies in the case of banking in Scotland then becomes very clear, because the loss of integrity extended across the whole system. The larger banks in Scotland became larger again, either acquiring other banks, or merging or being themselves acquired, so that the allegiances of these banks were no longer to the tradition of Scottish banking, but to a new form of capitalism. ‘The leaders of the banks became people who were looking after the western economy joint stock model’ (C5:
101). This separation of banks and the leaders of banks from the tradition was
perhaps the most fundamental disruption to coherence, and it implied loss of authority;
the tradition lost authority over the banks, because the leaders of these new large diversified financial institutions were no longer traditional bankers. The practice itself became ‘disaggregated’ (C5: 103), as the overall competence of the generalist bank manager was split up into specialist skills sets (C8: 161) and redistributed within the bureaucracies of these new larger international institutions. Working environments were thereby created in which these specialised skills sets were regrouped into project teams and newly defined ‘practice teams’ (C9: 168) within matrix management
structures provided by the organisation, rather than by the profession.
The participants in this research speak explicitly about a new and aggressive form of
2008b) diagnoses the problem of hostility to practices as one which is particularly characteristic of Anglo-American ‘liberal’ market economies (LMEs) and ‘impatient capital’, in contrast to ‘coordinated’ market economies and ‘patient capital’ which are more supportive of practices. He also acknowledges that rather than speaking of very broad categories of types of capitalism, it may be more helpful to speak of a particular type in a particular country in a particular period. The findings of the current research seem to corroborate some of this thinking. It is striking how quickly the character of the market for financial services in Scotland changed over the period 1980 to 2000, and how this had an immediate impact on old banking as a practice.
MacIntyre himself seems less interested in distinctions between forms of capitalism in this way. Whilst acknowledging that there are differences of economic and
bureaucratic culture between Anglo-American capitalism and some European models, MacIntyre (2007, p.86) nevertheless believes that ‘in every case the rise of managerial expertise would have to be the same central theme’. This also is true to the
experience of the participants in this research, for whom the rise of the generalist manager was part and parcel of the same transformation.
Moral incoherence in new banking
When new banking displaced old banking, it prioritised new goods, with quantitative targets for corporate growth, sales and profitability replacing the ends of social
relationships valued by old banking (S4.3 and S4.4). Because these new goods were external goods (the goods of the institution rather than any practice), there was an automatic disruption to the coherence between goods and virtues. Many of the virtues of old banking such as truthfulness, patience and the ability to form stable customer relationships were no longer valued by new banking. Instead, qualities such as flexibility and ambition were required, and new skills were encouraged including the skills of selling and manipulation.
The breakdown of the coherence originally provided by old banking in this narrative seems very clear, but what also emerges is a bleak view of new banking, because it appears that new banking itself has no similar coherence of its own to offer. This view needs to be stated with a degree of caution, because no effort has been made in this research to seek a positive view of new banking, and the sample used for the research conversations has emphasised the voice of old banking. Nevertheless, at least from the perspective of these Scottish banking leaders, this lack of coherence is marked. Its symptoms in new banking include the following: the virtues of leadership were lacking, so that not only did individual leaders of new banking lack crucial virtues (S5.9) but the banking system itself encouraged the corresponding vices of recklessness (P10: 200),
greed (C3: 49) and dishonesty44 (C2: 30); new quasi-virtues sprang up, qualities such as flexibility (C9: 177), speed (C10: 191), adaptability (C9: 184), authenticity (C10: 192) and charisma (C5: 100); and there was a deliberate move to distance the new banks from the tradition, both culturally and structurally (C1: 2, C3: 57). It is also worth noting the large fact that as an enterprise new banking proved itself to be incoherent by its own standards within a remarkably short space of time. It took less than twenty years for the new structures to be established, for their aims and objectives to become clear, and for the leading banks to destroy themselves. Their standards of success and failure were a matter not of human relationships but of metrics (C3: 49) – the metrics of corporate size and profitability – and by exactly those measures they failed
catastrophically (C10: 203).
From the point of view of MacIntyrean enquiry, the heart of the problem is that, in new banking, there is a gap where the practice of banking should be. The coherence of old banking was achieved not just by an overall theory of banking or even by the pursuit of a practice, but by the integration of social structures, practice, institutions and tradition.
So when the question is put in a range of different ways in these research
conversations, ‘What was it like to be a banker?’, there is a unanimous response from all those who qualified as full members of the Chartered Institute under old banking45. The details and circumstances of their different stories vary, but the core picture that they paint of a coherent profession – which I have argued amounted to a practice – is the same; they are all able to articulate the goods, virtues, skills and structures of their working lives in ways which clearly convey that it is one profession which is being talked about.
This is not the case with new banking. New banking is characterised by a wide range of different skills and specialisms coordinated by general managerial control to work towards the goals of organisational effectiveness (C9: 168). Workers within this
44 It may seem a severe judgement to say that new banking encouraged dishonesty on a systematic basis, rather than simply saying that dishonesty was rife. This latter position might perhaps be argued in some cases of mis-selling, and one of the participants does argue in this way, suggesting that rampant mis-selling was somehow not a failure of senior bank leadership, but rather the fault of a broad swathe of middle managers acting in their own interests.
However, even if that particular argument was to be believed, there are plenty of other practices in new banking which absolutely require the hiding of information in order to be successful.
These include systems for the trading of securitised debt on a competitive basis where winning requires that one is able to outwit one’s opponents, by knowing better than they do the nature of the risks contained in highly complex instruments or by calculating the odds more quickly than them (C6: 120, C8: 156).
45 That is, eight out of the ten participants. One participant is not a banker by training, and one
system may be drawn from a range of professions such as HR, legal, IT change management and so on (C9: 182), and including more than one profession under the banner of banking (C4: 83). This latter group of professions or profession-like activities include retail banking, investment banking, and a range of other finance related
functions and sub-functions such as risk management, credit control and foreign exchange dealing, and extending into investment management, insurance, pensions management etc. There is no unifying practice at the heart of new banking.
We have now at least a partial answer to the question framed earlier (S2.9) in
response to Annas (1989): ‘To what extent did the institutions of banking in Scotland stand or fall with the coherence of the reasoning that the tradition of banking
produced?’ It seems in the case of banking in Scotland, the two stood and fell together and that this was a closely connected process in which rationality and the structures in which it was embodied affected each other. It is particularly the idea of traditions as socially embodied in practices, institutions and wider social structures which allows us to articulate these connections.