In the congress organized by the BBV Foundation on "The Ethical Dimension of Financial Institutions and Markets" on the 15th, 16th and 17th of June, I was able to explain that the financial markets are of vital importance for the economic development of a country since they allow the behaviour of savers and investors to be adapted in the sophisticated, interdependent and changing current world. The market which allows channelling of funds from moneylenders to borrowers to take place quickly and flexibly without tensions or inefficiencies, facilitates payments and exchanges in the economic system and allows managerial projects to materialise with greater urgency and effectiveness. Those markets put the different agents in contact with each other and are an appropriate mechanism, if the rules of the non-discriminatory game are clearly established, for fixing a fair price for assets. They allow to provide liquidity promptly for those assets and reduce the terms and intermediation costs. The wider, more transparent, freer, deeper and more flexible a financial market is, the better and more efficient it will be from a merely technical point of view.

If we understand by liquidity the certainty and ease of transforming the assets possessed into short term money without losses; profitability as the capacity of an invested capital to produce income; and risk as the element of uncertainty that can affect the activity of an agent or the development of an economic operation; each bond has a concrete constellation of liquidity, profitability and risk that varies with the course of time. According to which circumstances of proportionality arise in the assembling of each one's wealth and which in the composition of their equity holdings, more or less priority will be given to liquidity, profitability or risk.

As the situations of each individual are always different and change with time, the financial markets perform a social function of vital importance for connecting situations, better preserving individual freedom and responsibility. The valuations of savers can better match investors' aspirations if the operation of these markets is adequate. But also, the perception of market size and ease of access foments saving and investment giving a wealth of alternatives, security and stability to the system. The savers of today can be the investors of tomorrow and vice versa. Those who need liquidity can find it more easily. Those who prefer to assume risks or who value security more will have a wider fan of possibilities and the market size will allow those risks to be shared, diversified and made less traumatic. That climate of trust in the markets generates a positive economic spiral impossible to quantify when possibilities of different managerial projects are greater and, in the last analysis, the variety of projects of life.

An important social function is thus performed but the financial markets and institutions, in the strict sense, are not ethical. Ethics refers, fundamentally, in a radical way and in its own sense, to physical people; it refers to conscious human acts by those people that work in this or that institution or that intervene, in one way or another, in this or that market, in these or those financial markets. A securities company or agency, or the entities that manage the stock exchange for example, do not operate; it is people that operate. Moral behaviour, as a last resort, guides individuals, not institutions. This is no obstacle for ethical behaviour to be co-ordinately investigated by the different personal components of an organization and, therefore, institutionalised. One can also apply in a derived sense the popular statement that the whole company, or institution, works well "as a single man."

Remembering this I believe that it is as well to avoid the tendency to depersonalise responsibilities, leaving them for the idle, wordy and neutral collectives or to the merely functional aspects. Communities and functional instruments are not really ethical. For several decades for example, there has been a certain macroeconomic and circumstantial obsession, giving a nearly personal image to the statistical and market indexes, the GDP or idolizing the interest rates marked by this or that Central Bank. Almost without realizing, we have created and extended a world of functional relationships in all directions where, logically, ethics do not make sense. The image of the scientific economy that tends to be placed outside of the average person's reach, creating an environment strictly reserved for experts that take refuge in complex specialized terminology, is very widespread. There the econometric models, matrices, multiple abstractions or lineal equations and three-dimensional graphics become living beings. This type of economic thinking and reasoning tries to arm itself with the positivism of the scientific paradigm of inanimate nature, removing any inkling of ethical-philosophical consideration to show the possibility of a merely neutral and descriptive handling. Gunnar Myrdal already clearly criticized the numerous attempts to elaborate an amoral economic theory based on false professionalism and proposed working with explicit premises of value. That speculative and seemingly neutral world moves further and further away from the problematic of individual, real, colourful and always surprising human action.

Ethics in general, like the ethical virtue of justice, do not consist of giving, fulfilling obligations, making saving decisions, carrying out investments or distributing things based on the cold impersonal data that indexes or countless functional groups transmit us. The ethical responsibility, for example, of those who make certain decisions in a financial institution has to look out for the concrete consequences on shareholders, specific workers and depositors or clients with their original characteristics. Considering ethical behaviour in the financial markets, capital should be treated not as a simple neutral thing but as something whereby its concretion depends on the responsible decision of certain people that contribute to the achievement of different managerial objectives. Behind all index, financial assets and concretion of capital it is necessary to see people.

No decision in the market is neutral. It will be more or less negative or more or less positive, but never neutral in each concrete case. It is better to forget the myth of functional neutrality because there is a radical and deep moral presence even in the most insignificant actions. Limiting us to the financial environment, each investment in the stock exchange in primary or secondary markets, or in the monetary markets, in foreign currencies or options, is a concrete option in a bond, in a voucher, in a company or in a State. Rafael Termes affirmed recently: "The case of a person of modest income who invests all their savings in financial assets without risk, without even having to think about the eventual obligation of dedicating them to a concrete productive project, is not the same as the case of one who, having great financial capacity, for social responsibility should think about the obligation of not using it entirely in monetary assets without risk or, what is worse from a social point of view, in refuge assets like precious metals and works of art. This person should seriously think that they have the obligation of dedicating at least part of their capital, in a reasonably analysed quantity and diversified form, to creative investments of wealth and well being. It is possible that this decision, from the merely economic point of view, implies an opportunity cost, at least in terms of risk assumption, but the they will have chosen an ethically better option. They will have fulfilled their social responsibility in the employment of their capital." Therefore one or the other option is not ethically neutral. Indeed there are ethics in the financial markets because their movements and reactions are not merely technical. We are not talking about a physical and determinist mechanism but a living and very complex organism as are the thousands of human people that make their daily complex decisions.

Joseph John Franch Menéu
Professor of Political Economy
Gaceta de los Negocios Autonomous University of Madrid