IFF San FranciscoNov. 17, 2010

MARIA PEREIRA

Conscious FinanceConscious Finance

Interconnecting Levels of Perception

Outline of Project

• Part I – Laying the Framework: Philosophical Thought, Social Norms and Recent Developments in Neuroscience

• Part II – Creating the Framework: How the Financial Paradigm Can Evolve with an Increase in Human Consciousness

The Financial Paradigm

• Neo-liberalism: institutional blind faith in unfettered markets led to crisis

• Political response: legislation

• And yet...“We can’t legislate wisdom or passion. All we can do is

create the structures and hope that good people will be appointed who will attract other good people.”

(C Dodd, NYT, July 16, 2010)

Incorporating philosophy into the financial/economic discourse

• Subjectivity vs. Objectivity

• Adam Smith• Adopted as father of market liberalism: The Wealth of

Nations• And yet, believed in human capacity for ‘sympathy’

and societal predisposition for human goodness: The Theory of Moral Sentiments

• A utilitarian:

“the greatest happiness for the greatest number”

Why do we consume?

• Pleasure• Desire• Love

• Irving Singer

• Luc Ferry: The Revolution of Love: Spirituality for the Laity (2010)

What kind of society do we want?

• “Commercialization of modern life...is eating away at the very heart of social life, not merely by putting salesmanship in place of moral virtue, but by putting everything – virtue included – on sale.”

• “The ethical vision safeguards social capital...gives sense to our lives. But it is demanding.”

Roger Scruton (2000) Modern Culture

What type of person are we?

• Egoistic• Enlightenment• Freud

• Compassionate• Auguste Comte: no self-interest can rival universal

love• Jeremy Rifkind: biosphere empathy• Teilhard de Chardin: evolution of consciousness• Luc Ferry: revolution of love

Findings in Neuroscience

• Martin Hoffman

• Jean-Pierre Changeux / Paul Ricoeur

• Antonio Damasio

• Francisco Varela

Role of Language

• “the thinking life”

• “Language and cognition are deeply intertwined.” (Jackendoff)

• “Language is a sophisticated mechanism for expressing empathic communication.” (Arbib)

• What is the current economic/financial language?

Importance of Reflection

• Discussion of reflection in neuroscience

• Middle Ages: no knowledge is complete without both• Ratio: discursive, logical thought• Intellectus: intuitive understanding of the truth,

arrived at through contemplation

“It is necessary for the perfection of human society that there should be men who devote their lives to contemplation.” (Thomas Aquinas)

Theory of Society

• “History is but a succession of changes.” (Victor Hugo)

• Homeostatic loops: causal factors which have a feedback effect in system reproduction, where that feedback is largely the outcome of unintended consequences

• “Human history is created by intentional activities but not an intended project.” (Anthony Giddens)

Marcuse: civilization as a movement from barbarism

Barbarism Civilization

Immediate satisfaction Delayed satisfaction

Pleasure Restraint of pleasure

Joy (play) Toil (work)

Receptiveness Productiveness

Absence of repression Security

Discussion: Part I

• Incorporating philosophy into economics: subjectivity vs. objectivity

• Why do we consume?• What kind of society do we want?• How is the human person?• Findings in neuroscience• Language• Reflection• From empathy to ethics• Theory of society

Part II: Creating the new financial paradigm

• What drives the financial apparatus? • A review of the history of finance and its evolution• A brief analysis of the interaction of human

behavior and the financial system• A proposal for necessary financial reform –

relating it to philosophical thought, social behavior, recent developments in neuroscience, and increasing consciousness and empathy

• Building the future: the importance of education, reflection and ethics to ensure financial and social harmony.

G20 Meeting, Seoul, Nov. 2010

• “I kind of feel like I’m living in parallel universes...in Korea I feel...warmth...and the sense of trying to have a dialogue...but then when I get back to my real universe, it’s cold in that universe.” Vikram Pandit, CEO Citigroup

• “There needs to be a mind shift away from making money to earning money in the proper sense.” Angela Merkel

Review of the evolution of finance

• What is the role of money?

Oikonomia

• What is the human role in society?

Homo economicus?Homo empaticus?Integrated homo?

What caused market failure?

• Blind faith in unfettered markets: “ a simple, constant and clearly communicated

ideology of market efficiency and investor rationality leading to equilibrium” (Adair Turner)

• Human behavior:“today’s financial crisis is, at heart, a crisis of

trust, a loss of confidence in counterparties and regulators” (Onora O’Neill)

Prerequisites of financial reform

• Root causes of breakdown must be addressed:• Addiction to growth• Resource constraints (financial and ecological)• Consumption paradigm: from what is happiness

derived?• Financial modeling and speculation

• Expanded metrics and regulation cannot solve problem

• Trust and responsibility must be restored• Ethical invesment is not an asset class, but an

all pervasive requirement

Building the future

• Education

• Reflection

• Virtue derived from within

• Ethics stemming from empathy• “the self like the other” (Paul Ricoeur)

• Community

Discussion: Part II

• Role of money• Root causes of necessary financial reform• Human causes of market failure• Metrics• Restoration of trust: virtue and ethics• Building the future