A discussion I heard on the radio today between a self-described socialist and a radio talk show host reminded me of this post about greed.
It also brought into a focus an important point that many people miss and may even be a source of dislike or distrust for capitalism.
The point is that greed is not unique to capitalism. Many people seem to think it is. Or maybe they mistake any money-making endeavor for capitalism.
There are greedy politicians, greedy not-for-profit chairmen, greedy welfare recipients and greedy welfare administrators. There were greedy kings, greedy socialists, greedy communists and greedy fascists.
When a corrupt politician sells his vote, that’s not capitalism. That’s corruption. And it’s greed.
What is unique to capitalism is its ability to harness greed for the greater good, as Walter Williams discusses in the post I linked to.
It does this by encouraging people to produce something of value — using what is rightfully theirs’ — for others to satisfy their greed.
“What is unique to capitalism is its ability to harness greed for the greater good, as Walter Williams discusses in the post I linked to.”
I wonder if there aren’t some unintended consequences to harnessing greed for the greater good. Does emphasizing this natural tendency (as you point out correctly I think, greed is part of human nature) cause it to grow in the population?
Put another way, do people see that greed works in our culture and therefore become greedier in order to succeed? (Or maybe they don’t see that it works but rather they simply understand or intuit that it works.)
Does capitalism select (in the evolutionary sense) for greediness – those who thrive are those who are greedy and therefore they pass this trait on to their offspring who are in turn more likely to thrive because of their greediness.
And (if any of this is true) what does having a greedier (at least among those who thrive) population do?
I don’t think it would grow any more in capitalism than any other system. It’s not really about ’emphasizing the natural tendency’, it’s about aligning it so that when someone pursues their greed they are creating value for others.
Also, I want to clarify something. Capitalism also aligns a natural tendency that is far less severe than greed to creating value for others, self-interest.
Capitalism may select those who are better at producing value for others, but I don’t think it necessarily selects those that are greedier. I think political processes do that.
In unfettered capitalism, the market determines who gets what. In socialism, the government makes that decision. In the former, one’s productivity determines how much he makes. In the latter, one’s political connections decide.
“Also, I want to clarify something. Capitalism also aligns a natural tendency that is far less severe than greed to creating value for others, self-interest.”
That does sound a lot less evil than encouraging greed. 🙂
I stumbled across this article about a web-entrepreneur named Jesse Willms and it seemed kind of a perfect fit for what I was thinking (encouraging people to pursue their self interest without considering the consequences). I’d be curious to hear what you guys think of it. It’s a long article but I found it fascinating.
That’s fraud, which is also not unique to capitalism or commerce. Fraud occurs in politics, with much larger and far-reaching consequences for others (and often far less consequence for the fraudster).
There’s an old saying about being prudent, “If it sounds too good to be true, it probably is.” Unfortunately Willms taught a lot of people that lesson.
If anything, while fraud can be damaging (see Enron), capitalism also has a tendency to weed it out and contain it (notice the whole economy didn’t go down with Enron, just Enron) rather than collapse the whole thing (e.g. Soviet Union).
“That’s fraud, which is also not unique to capitalism or commerce. Fraud occurs in politics, with much larger and far-reaching consequences for others (and often far less consequence for the fraudster). ”
True. It is fraud. But isn’t fraud usually committed with greed as the prime motive? And isn’t it committed more often if there is a low fear of consequence (lack of enforcement, laws or shame)?
Greed may be a motive for fraud, sure.
And, yes, I think fraud would be committed more with few feedbacks against it.
But, I think the feedbacks against fraud in capitalism — though not perfect (what is?) — are stronger than other systems. Why? Because in true capitalism, everybody has a stake to be prudent in their transactions because they want to gain value as well.