Q: What did universities learn from the financial crash? A: Nothing

Most finance education is morally bankrupt. We must stop peddling dangerous lies to our students
 http://www.theguardian.com/higher-education-network/2016/feb/02/q-what-did-universities-learn-from-the-financial-crash-a-nothing?CMP=share_btn_tw

 

‘Finance academics are still spinning the theories of the importance of greed, profit and wealth maximisation,’ says Atul Shah. Photograph: Alamy

Atul K Shah

Senior lecturer at Suffolk Business School, University Campus Suffolk

Tuesday 2 February 2016 00.00 GMT Last modified on Tuesday 2 February 2016 11.11 GMT

The global financial crash of 2008 led to bailouts that are still being borne by ordinary people all over the world through higher taxes, higher property prices and lower savings rates.

Adam McKay’s new film The Big Short reveals how a few people made huge amounts of money from the disaster, as millions of others went bankrupt through no fault of their own. But amid the uproar, few have asked what role finance education and research played in the crash, and what influence they could have in the future. These questions are particularly pertinent now, as the possibility of another global financial crisis looms.

The answers are damning. Most finance academics have continued as before, spinning theories (which really are ideologies) of the importance of greed, profit, wealth maximisation and free markets for efficiency and risk-hedging. There is virtually no teaching about history, culture or ethics. Accounting and finance are researched and taught as if they are acultural, apolitical and ahistorical technical disciplines.

The reasons for this go back to the neo-liberal origins of the discipline, and the ways its research is controlled by a conservative elite suite of journals, whose ideology is based on extreme capitalism and wealth creation.
The research excellence framework (REF) has put even more pressure on finance academics to be conservative and toe the line of these journals, thus making students’ experiences even more alienating. We have already seen rebellions in economics teaching, and we may soon see similar moves in accounting and finance, as young people learn about corporate tax avoidance, financial exploitation and the corruption of politics and banking culture. At present, most of this learning is taking place on social media and through groups like Occupy, rather than in university classrooms or lecture theatres.

The complexity of the subject has been used to disguise the underlying ethics and values of experts and the academy, and to influence the practice and industry of finance. In his book Debt: The First 5,000 Years, Professor David Graeber of the London School of Economics explores the human history of finance and finds that it is a cultural construct, grounded in social relationships and exchange.
It is only in the past 35 years that finance lost this grounding and become a tsunami which, although shaped by humans through the creation of markets and institutions, is now out of control, and is controlling ordinary people instead. Graeber argues that states have lost the power or the will to shelter their people from high finance and its slavery. They have lost the language and means to resist, as the technical complexity is too much for them.

My research has covered similar areas, such as the reasons for the risk management and audit failure of HBOS, and the role of politics and conflicts of interest. I have worked with whistleblower Paul Moore to expose the truth about what went wrong at HBOS. I have forensically examined the ethics and culture of the “big four” accounting firms.

As a Jain, a chartered accountant and an academic, I cannot ignore such truths. I have been hugely influenced by the work of Professor Prem Sikka of the University of Essex, who has never been afraid of speaking truth to power. In the past three years, I have transformed my teaching by infusing every class with ethics, and encouraging students to talk about their personal experiences with finance and how it affects their families on a daily basis. I have made my teaching personal and holistic.

My students have responded enthusiastically. Many are undertaking dissertations on ethical finance, or investigating financial exploitation and banking culture. When I showed the Academy Award-winning film Inside Job in class, one MBA student was so impressed that he set up a series of visits to local church and community groups to give them the facts behind the financial crash, and show them how the public were duped, exploited and forced to bail out the industry without their consent.
I am teaching three courses in finance this semester, and I have once again updated my teaching to include recent events. Instead of feeling disempowered by finance, my students will learn to question its values, culture and theoretical frauds. They will not fear the technical sophistication which disguises the corruption of modern accounting and finance.

Dr Shar tweets at @atulkshah.