Chapter 9: Have Icelanders Learned Their Lesson? The Investigation of the Icelandic Collapse and its Aftermath

After the financial collapse, the Icelandic Parliament set up a Special Investigation Commission to explain the causes of the events. A working group on ethics evaluated the explanations of the commission from a moral perspective and placed its analyses in the wider social context. This chapter delineates the approach and the main findings of these investigations. The author argues that the main lessons to be learned are about the need to strengthen democratic structures and professional practices in business, politics and administration. The implications of this structural approach for assessing the responsibility for the collapse are discussed in the light of I.M. Young’s social connection model. While the parliamentary reports were well received, three events hindered Icelanders in learning the reports’ main lessons. In addition to a volcanic eruption immediately after the publication of the report, two major political debates led the reconstruction work astray. The first was about the case of the former prime minister and the second was the fierce Icesave dispute about whether Icelanders should share the financial burden with the citizens of the United Kingdom and the Netherlands who lost their savings in the Icesave accounts. This issue dominated Icelandic public discourse for three years and diverted political attention from the message of the parliamentary reports – namely, that the main explanatory factors for the financial collapse were weak governance and flawed practices within Iceland. As a consequence, the political sector has lagged behind other social sectors in efforts to learn lessons from the financial collapse.