PYTHAGORAS said that there are three kinds of people, who can be classified by analogy to those who attend the games: competitors, spectators, and those who come to buy and sell under the stands. He likened philosophers (a term which for him included mathematicians and scientists) to the spectators, imputing a certain superiority to them, especially over those bartering and haggling.

The current global financial meltdown makes it easy to feel like one of Pythagoras's spectators - if one is not directly involved or affected. Greedy speculators and bankers, wild fear-driven stock-market fluctuations and insufficient regulation have combined to create a dismaying mess which is depriving ordinary folk of their homes and jobs.

The meltdown started because financial organisations made unsafe loans, and packaged them into securities for sale to other financial organisations, who bought them because of the high rates of return they promised - at least to begin with.

Several years ago financiers saw that there was a problem with these debts, and began trying to shed them. When the honeymoon period of many of those debts ended - as mortgage rates rose from "teaser" levels, and repossessions dramatically increased as a result (by 79 per cent in the US from 2006 to 2007) - the extent of the infection throughout the money markets became apparent.

Then financial institutions lost faith in each other, and began to refuse to lend to each other. Banks depend on loans to service their daily workings. Without credit they can fail. At the centre of the "credit crunch" was a freeze on interbank loans, which gummed the entire financial system and threatened its collapse. That is a prospect so hideous that governments could do nothing but intervene to prop things up.

The Latin root of the word credit is credo, which means "I believe". The banks and other institutions lost mutual belief for the good reason that they knew they were not themselves trustworthy.

Neuroscience has shown that the hormone oxytocin influences behaviours associated with bonding, trust, and suppression of anxiety. Rather apt work has been done by neuroeconomists on subjects participating in a game called Investor.

Nasally administered oxytocin doubled levels of trust among players. This prompts the thought that instead of pumping billions into the money markets, governments might more cheaply have sprayed oxytocin up the noses of bankers and speculators.

The serious point here is that the financial meltdown is a classic display of non-rational behaviour. Greed prompted dangerous risk-taking, and was followed by panic that made stock markets plunge wildly, causing a number of blue chip companies to collapse or be nationalised.

Unless serious steps are taken to avoid a repetition, as soon as everything stabilises the sequence will restart. The profit motive appears to trump all other motives, by any legal or near-legal means available. It will reassert itself and eventually get out of hand again.

It is important to recognise this because there are is another arena where the profit motive wreaks even worse havoc and is poised to wreak yet more: the natural environment. As the ice caps melt, they increase accessibility to a host of natural resources, not least oil and gas, and open up new and quicker sea routes. This will trigger a rapid increase in exploitation of polar regions unless international agreements to prevent it are brokered.

The global financial meltdown and the melting of the polar caps both emphatically teach the same thing: if there is one thing we cannot afford, it is unbridled profiteering.

From issue 2681 of New Scientist magazine, 05 November 2008, page 48

New Scientist 05 November 2008

"Greed really has become a part of America’s value system.

"Get as much as you can, while you can, and don’t worry about the other guy.

"Corporate greed often exploits the poor for greater profits.

"Political greed makes promises never meant to be kept in order to achieve position.

"Personal greed sets us free from a sense of responsibility to the community, and establishes love of self as the greatest commandment."

Joe Thorn.net