Abstract |
Both success and failure of free market economy could be explained$\backslash$nthrough its understanding of human nature. Its great success in$\backslash$nproduction comes from its principles based on ``self-interested{\{}''{\}}$\backslash$nhuman nature driven by animal souls and egoistic desires. The system$\backslash$nachieves higher productivity by providing many incentives to motivate$\backslash$npeople whose goals are to maximize their interests. On the other hand,$\backslash$nthe failure of the free market system comes from its lack of moral$\backslash$nprinciples to balance irrational and irresponsible decisions/behaviors$\backslash$nof animal souls and ego. For that matter, the paper argues that the 2008$\backslash$ncrisis was essentially a moral crisis of capitalism with its root going$\backslash$nback as far as the Enlightenment. It suggests that during the crisis,$\backslash$nthe ``invisible hand{\{}''{\}} of free market turned to ``stealing hand{\{}''{\}}$\backslash$nthrough market games driven by the irrational and irresponsible$\backslash$nbehaviors of politicians, creditors, and consumers. The paper concludes$\backslash$nwith few lessons learned from the crisis. First, the crisis created a$\backslash$ngreat opportunity to acknowledge the need for moral values for efficient$\backslash$nmarket system. Second, we should revise our assumptions of human nature$\backslash$nand behaviors in economics and finance to include predictably irrational$\backslash$ndecisions of individuals. Third, we should include moral education in$\backslash$neducation system at K-12 levels, not at the college. Finally, we should$\backslash$nrevise our economic models to capture the importance of moral and$\backslash$nspiritual capital as endogenous variables. |
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No Result Found
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Year of Publication |
2011
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Journal |
AFRICAN JOURNAL OF BUSINESS MANAGEMENT
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ISSN Number |
1993-8233
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Download citation |
{The 2008 financial crisis: A moral crisis of capitalism}