Defending Shylock

A formal publication of my “Defending Shylock: Productive Work in Financial Markets” is forthcoming this spring. For now, here is a draft version [pdf] of the sixteen-page essay.

From the Introduction:

“Ambivalent attitudes about financial markets are as old as financial markets themselves. Plato, in The Republic (555e), condemns moneylenders. Jesus threw the money lenders out of the temple, on the grounds that they were defiling a holy place. Roman emperor Augustus, according to Suetonius’ racy biography, was always especially displeased if he discovered any of his knights engaged in interest rate arbitrage (Suetonius, p. 76). Shakespeare, in Hamlet, has Polonius counsel his son ‘neither a lender nor a borrower be,’ and in The Merchant of Venice presents us with the image of the lender as a cunning Shylock hoping to extract his pound of flesh.
“We are, in the twenty-first century, heir to all these views.
“At same time we are committed to financial markets. … ”

From the Conclusion:

chrysler-100x126“… Judged by these criteria, financial markets are highly virtuous institutions. Obviously this is not to say that everyone who works in financial markets is a moral hero or that mistakes and abuses never happen. But it is to say that injustices are aberrations in the system and that the system is designed to help us be that best we can be. Financial markets do create value, and they do so by encouraging in us the core of moral excellence. We cannot ask more of any institution.”

Comments or corrections very welcome before the formal publication.

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