DJ: So the moral conclusion, as it were, is: don't let's moralise about this?

SB: Well, there are plenty of things to moralise about, but to my mind the most difficult question is that people can behave well in small groups, but all the nastiness is then directed towards outside groups. Take any international crisis that happens to be going at the time of publication - you'll find that there is hatred towards other groups. That has never been resolved and indeed there's more of it. I once shared a tutorial with somebody who was a great devotee of Moral Re-Armament, and I reveal my age a bit because the Korean War was going on at the time, and I said: "Do Moral Re-Armament people oppose the Korean War and do they take a pacifist view?" And he said: "No, they fight better." That was the end of religion for me!

DJ: Edward, what's your view?

EH: I wouldn't draw any enormous conclusions from this crisis - it hardly shows the immorality of the system or anything remotely like that. I think it's a technical crisis, a problem that largely developed because we messed up on one of the things we are supposed to keep track of in running a complex economy. We should adjust for that. I would say that if you want to draw a moralistic lesson from this it is that you should remember that people are not always able to be virtuous and you need certain kinds of checks, whether they are regulatory or competitive, to ensure that they live up to their best nature. This crisis suggests an interesting novel more than a major rethink of public policy.

DJ: In spite of things like Enron. Or do you think this is not a new story, people have always been corrupt?

EH: I think if we had medieval novels, you would discover that the old squire was not really what he was meant to be. Read The Canterbury Tales. But if one wants to address a moral economic issue today, the most outstanding one wouldn't be financial dysfunction, but be the gap between rich and poor countries and rich and poor people, which now really does have some economic significance. I would much rather focus on the questions of poverty that remain in the world than on the excesses of a few ill-tempered or ill-tethered bankers in a badly-designed system.