God and Investment Banking

Colleague Mike Schutt linked to this blog by John Terrill.  Consider the following assertion (quoting Lloyd Blankfein): “Investment banking can be God’s work.”  A fair number of folks would agree with the this sentiment with but one minor emendation: change “God’s” to “devil’s.”  Terrill would, I think, agree with both versions.  Investment banking can serve divine or diabolical ends; it’s what you do with it that matters.  Or, better yet, who you are, that directs the telos of any human endeavor, whether investment banking or social work.

This is undoubtedly true (which is to say, I agree with myself).  Humble sinners tend to do less evil than arrogant ones.  However, we should not ignore the structural question: What should be the place of contract in the world?  I most recently addressed the justification of contract law here but the scope of legally enforceable agreements is a normative one.

Just because we can commodify something and give an agreement related to it legal sanction doesn’t mean that we should.  The existence and scope of contract law is a political issue and, as we have with patenting life forms, our (read “American”) political impulse is to extend legal protection as far as possible.  The question is not socialism or capitalism; the benefits of private ordering have, I think, won the day.  Instead, the contemporary question is whether we should add legal sanctions to social ones.  Whether the law should add its coercive cachet to the sorts of financial instruments whose trade enriched and enriches our investment bankers.