Crisis in Governance: Business Ethics and the Race for Profit

The 2008 global crisis has illustrated the contradiction between the discourse on good governance or corporate ethics and the reality of struggle for profit maximization. Corporate governance as advocated by many will not be enough to prevent future crises. Corporations should be recognized as they are, profit seeking entities which cannot regulate themselves or fully serve the common good. Governments should create effective international regulation to reduce the negative externalities of corporate activities. This book borrows from recent economic and financial history and reflects on the last crises to analyze the discrepancy between prudent and weakly coordinated improvements in economic regulation, and what really needs to be implemented on a global scale. Very little has been done to correct what was identified after the Enron crisis and once again after the 2008 crisis as the most damaging flaws of the financial system, such as conflicts of interest between rating agencies and issuers, or abuses of self-regulation by the market. If we were to experience a new crisis in one year from now, it is likely that several governments would hesitate before reproducing their 2008 interventions, which might be sufficient to transform the crisis into a catastrophe in today'¬"s global economy. A new and effective international economic governance is needed to avoid such catastrophe. It is also needed to reconcile the profit-seeking engine of the economy with the global development needs. This type of governance is not currently in place and has to be invented, through governing bodies like the G20 and governing tools like the stock exchange regulations. The discussion makes use of economical and financial theory, as well as history and management sciences, to offer a clear cross-disciplinary analysis of challenges often blurred with technical complexity.

Franois Valrian is a former investment banker with BNP Paribas and partner with Accenture, the global consulting firm. He also led the private sector programmes at Transparency International, a nongovernmental organization that fights corruption. He graduated from Ecole Polytechnique and Ecole des Mines de Paris in France, and holds a PhD in early modern history.