Morality, Financing, and Investing
Financing activity is typically focused on economic purposes and is aimed for profit, but what if the entity one is financing is corrupt or behaving in an immoral, objectionable way? Does profit supersede the immoral, objectionable behavior of that entity? What if a whole nation is acting in an immoral, objectionable way? Should one continue to finance that government and organizations in that nation-state, or would halting financing and divesting be the moral thing to do in such a case?
While the answers to these questions may seem obvious to some, in practice, this is not usually the case.
To premise this discussion, it must be highlighted that money, among its many functions, allows ideas to come to life. It is a means that enables the provisioning of goods, resources, and services that are required for a good life and human flourishing, and it is meant to be used as an abstract resource to be allocated into projects that we deem valuable and beneficial. In other words, money allows things to happen. Furthermore, it does not only bring economic activity to life, but it is also a tool that enables political and social activity: we direct money into things we value and want; we direct money into activities and ideas that we want to materialize. For that reason, the financial sector is considered a critical and strategic component of any nation. It is the financial sector that mediates where money is being allocated and allows for fundamental activities to take place. Given the global nature of the financial markets though, as well as the financial dominance of a few countries, foreign investing plays a key role in shaping the activities and development of other nations.
Now, foreign investment is typically done with the aim of financial profit and gain. Foreign investors typically invest in countries they are optimistic about given the potential return on investment. That said, we do see foreign investments in bonds of a nation, for example, as support for that state. Many of those investments are made with profit in mind, but some are made in strategic alliance and solidarity that goes beyond for-profit motives.
To be clear, foreign investors could be private institutions, public institutions, supranational institutions, and individuals. While each has their own motives and goals when it comes to investing, at times those interests and goals overlap. Private institutions are expected to invest with profit in mind, but when it comes to certain initiatives and foreign investing, if the project or nation they are investing in is of strategic importance, they will go ahead with the investment in that project or country because they believe this is the right thing to do regardless of the risks associated with that project and country (to a certain degree of course). Also, there is an understanding that access to capital is an essential requirement for a project or nation to succeed and achieve the goals it is aiming for, so the financing is provided with the belief that the money will allow for success. Investment banks, for example, work with governments to help them raise money in the debt markets, and the investment bankers sell such bonds to investors. While the investor is in search of a profitable venture, in some instances, investors invest in the bond of certain governments to provide the financial support needed for that country to achieve its desires. The intuition here is that the government will be able to pay back the bond with interest in full, but a big motivation, in some cases, is also in supporting that country to allow it to achieve whatever it is seeking to achieve with the money being provided.
It is important to note that the financial sector has always played a major role in financing wars. While taxes were historically levied to fund wars and military expeditions, bonds have also been historically leveraged as a major instrument for financing war ventures and military activity. Today, through the global financial markets, bonds and other financial instruments continue to be used as vehicles to fund wars and military activity. So, here comes the question: if a state is committing atrocities and war crimes, is it moral for any organization or institution, be it private or public, to continue financing a nation committing such ghastly crimes?
With atrocities being documented and evident, the answer to the question posed is obvious. If an entity continues financing obscene behavior, the goal may not purely be profit driven, but may be in support of the actions of that nation or in the objectives and goals of that state. In that sense, it is the objectionable actions and goals that the state is committing that the entity is financing and that they fully support with their financing, regardless of the for-profit element of investing. The investing is directed towards political and ideological goals as opposed to pure economic goals. This is especially the case for direct financing of such atrocities – i.e. in the form of investing in bonds that that nation is issuing or by providing other forms of financing to allow them to purchase the weapons they are using to commit those horrid crimes to fulfill their aims.
On the other hand, some institutions and individuals may continue financing the monstrous behavior of a nation not because they align with their ideology and political interests, but because the ongoing financing of said nation's actions may be lucrative. In this case, the financing would be encouraging and supporting the atrocious activity purely in the name of profit, since the profit would be directly generated from the inhumane, terrible actions being committed.
It follows that in either case, be it in support of ideological and political interests or profit motives, if any form of institution, organization, or individual continues financing a state that is committing atrocities, then the moral standing of such organization, institution, or individual is evidently objectionable.
What about the financing of other activities in that state committing monstrosities though. As in, what about financing economic activity that is not going toward funding of weapons and direct funding of the atrocities being committed. Is it moral to continue, let’s say, investing in a business venture that is operating in the country committing atrocities? For example, investing in the agriculture sector or any other non-defense/weapons sector of that nation?
One can say that private businesses that have nothing to do with the atrocities being committed by the government of the state they operate in are innocent, and that it won’t make sense to stop financing them or doing business with them. However, money circulates and changes hands. Economic activity is essential for any country to operate. Part of the revenue generated from these private businesses is taxed, which enables the funding of appalling behavior. Also, companies are run by individuals, and the individuals running the company might have relations and arrangements with the government officials in the country they are based in, which means that they might be investing or directly financing the nation committing the atrocities, so financing their businesses enables them to continue financing the abhorrent behavior. Additionally, given that economic activity is essential for any state, investing and financing businesses based in that nation is akin to supporting the totality of the nation-state.
By not financing or doing business with a company in a country committing atrocities, one puts pressure on that state to change course due to the centrality of economic activity for sustenance of a nation. Continuously financing and doing business with companies based in the country committing monstrosities is a way of continuously supporting that nation. If the state is committing immoral atrocities and one continues investing or doing business with companies in that nation, then the one financing and doing business with that state is also complicit in the immoral, objectionable actions that that nation is committing, due to the fact that they are enabling money to flow into that country, which enables the nation to sustain economic activity and maintain its repugnant behavior by the financial cushion it is receiving. Therefore, halting financing and investing in those businesses puts pressure on the country to change course and stop the inhumane atrocities it is committing.
In many cases, one financing and investing in businesses based in a state committing atrocities is purely for for-profit reasons and detached from the political and appalling context. That said, some financiers and investors continue financing activity in such nations because they align with that state’s political and ideological motives or because they are generating direct profit from the financing of monstrous activity. They use capital to enable the nation’s government to achieve its desires in either case. This fact should put such financiers’ and investors’ moral standing into perspective.
As alluded to earlier, one might disagree with the actions being committed by that nation and not necessarily align with their political and ideological motives, but the investment opportunity is great. Would the profit aspect of this opportunity supersede the moral case given that any form of investing in that nation enables atrocious, immoral, and objectionable behavior to take place? At what cost, or moral cost, would one seek profit?
