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Greed is Good

Entry 1464, on 2012-11-20 at 22:13:52 (Rating 3, Politics)

There's a famous line in the 1987 movie "Wall Street" where a character, Gordon Gekko, says: "The point is ladies and gentlemen that greed, for lack of a better word, is good." The catch phrase "greed is good" has been popular for a long time and some economists believe it is literally true. Adam Smith talked about "enlightened self-interest" being good for economies and for society as a whole, and many people claim that the elite (in terms of owning wealth) in our society deserve everything they have. Are they right?

Before I answer I have to say that I have finally finished "reading" (in audiobook form) Ayn Rand's huge (1200 page) novel, Atlas Shrugged, which largely emphasises her philosophy (Objectivism) which essentially argues that greed is good (amongst many other things). I think this voluminous tome deserves at least one blog entry for itself so I won't go into too much detail now, but clearly it is highly relevant to this discussion.

We have a significant problem from the start, and that is the word "good". Some people would say that "greed" is also difficult to define but I think that a definition something like "the wish to acquire substantial amounts of wealth (in some form) for the individual's own purposes and beyond what is necessary for a reasonable level of comfort" would do. So good in what sense? For the individual involved? For the individual's society as a whole? For all humans? For the universe as a whole? Moral good? Practical physical good? What?

I would say they are all connected in the long term. Inevitably a concentration of personal wealth will affect that individual because society as a whole will react to it even if the individual gains an advantage in the short term. I also think morality is essentially a practical thing derived from the need for humans to interact peacefully in society so I think the distinction between moral good and practical good isn't as strong as many people think.

I also think greed is probably a natural part of most peoples' personalities so denying it is useless even if you disagree about it being good.

So is greed good? I think in most cases no, but since it is a fact why not make use of it in a positive way? It is possible to use capitalism to harness greed for the greater good. Enlightened self interest can exists as long as a system is set up to make use of it. But I don't think a totally free and unregulated economy is the way to do this.

The problem is that in a totally free economy the people who will do best are not generally the entrepreneurs or the geniuses and creative types, they are the people who are good at manipulating the system for their own good and not necessarily providing anything in return. Neo-liberals (and Ayn Rand) claim that business leaders are the ultimate innovators and deserve all they can get out of the system. But I don't see any evidence that this is usually true in the real world. I can only think of one true innovative genius who was also a business leader (in recent times) and that was Steve Jobs.

There have been a few in the past who were innovators and successful business people as well - Henry Ford and Thomas Edison wold be two prominent examples - but they are in the huge minority and there are undoubtedly many truly brilliant innovators with no business skills who would not do well in a pure capitalist economy.

So I would not complain too much if someone like the three people I mentioned above made a massive fortune because at least society is getting a lot in return. The problem is that the usual outcome is for people to make a lot of money because they are just good at making a lot of money. Currency traders, corporate raiders, and various other forms of low-life make a fortune but what do they contribute in return? Absolutely nothing. In fact they make a negative contribution.

In Ayn Rand's book there are two types of rich elite: the inventors and industrialists (the heroes), and the useless government parasites who have made use of the system for their own benefit (the villains). Rand claims that the former are the natural winners in a free market economy but I don't think so. I think it is more likely to be the second type of person who does best in that situation.

I know the supporters of neo-liberal economics would disagree. They would say that their economic system rewards the truly innovative and worthy. Well have a look at the rich lists around the world and show me how many of the people on those lists have really innovated. There will be almost none. Instead you will find brainless buffoons like the CEO of Microsoft who is only interested in maintaining the monopoly his mediocre software already enjoys, and you will find evil arrogant scum like the CEO of BP who thinks polluting the planet is just part of his business plan.

Truly innovative and valuable people don't do it for the money. Many of them do make a lot of money and might think they deserve it all (and maybe they do), but that's not their reason for what they do. Having read two biographies of Steve Jobs for example, that is very clear in his case.

So greed is good? No, I don't think so.

Comment 1 (3375) by JC on 2012-11-22 at 15:32:51:

You say; “I also think greed is probably a natural part of most peoples’ personalities so denying it is useless even if you disagree about it being good.” So we should not try to overcome some of the bad character traits and desires that we might come hard-wired with because it’s naturally there? This is a fallacy. Should we rape because we have the urge to have sex? No!

I think, by the way you concluded the piece that you may agree with me, but, I’m unsure. Regardless, thanks for the thought provoking post.

Comment 2 (3376) by OJB on 2012-11-22 at 15:33:23:

I think greed is a common hard-wired attribute of many people’s personalities. But I disagree with a system which encourages that attribute and even glorifies it. I would prefer a system which can constructively direct greedy impulses into positive outcomes. For that we can use capitalism but it needs to be controlled, so I disagree with laissez-faire economics.

Comment 3 (3380) by JC on 2012-11-30 at 11:09:23:

Thanks for the response.

I agree with your take on capitalism as well.

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