This week a friend asked me what are the questions we should be asking about the financial crisis and what should be done about it.

In recent months I have perceived (perhaps wrongly, since I haven’t attempted a careful survey) a leaning in the UK debate, including among discussions within the Church of England, towards talking about the need to breed more ethical bankers or banking culture, and less about the need for more fundamental, structural or architectural reform. It’s not that there isn’t a range of ideas in the mix. More a question of the balance of emphasis.

So to my friend I suggested the following question:

Can the problems with our financial system be resolved by training financial professionals to be more ethical? Or do the problems run deeper?

The answer hinges on how what we understand the moral/ethical problems to be.

I propose to distinguish four levels of morality/ethics:

• the individual’s behaviour in carrying out his/her role within a financial institution
• the corporate culture, both formal (e.g. codes of practice) and informal (the ethos and behavioural patterns encouraged or accepted by those in authority) in carrying out the given activities of the financial institution
• the institutional structures with the distribution of power, participation and accountability (or lack thereof) that they engender
• the nature and effects of activities carried out / goals pursued by that the financial institution. Is the direct intention of the activity laudable (e.g. mis-selling of Payment Protection Insurance in the UK)? What about all the knock-on effects through the economic system, especially on the vulnerable (e.g. facilitating poor corporate governance that may result in exploitation of workers in poorer countries, or the corruption of governments in resource-rich countries; or land-banking; or the de-stabilisation of foreign economies by the low-commitment foreign finance such as portfolio investment rather than foreign direct investment)? Are these effects ignored whether willfully or through neglect?

At all four levels, we need to ask what is good, what is bad, what needs changing, how should it be different? It won’t suffice to (attempt to) instill better ethics in individuals who must work in a toxic culture; nor to seek a more ethical culture in institutional structures which reward a toxic culture; nor to reform any of the above while continuing — without adapting or mitigating — activities that in their very nature or effects may be, in part, fundamentally unethical.

We need a more multi-leveled view of the ethics and morality. And given the current state of the debate, my sense is that the needed corrective is to be talking more about the institutional structures and about the nature and effects of the activities of financial firms.