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Greed Is Not Good (But Self-Interest Is)

In 1987, Wall Street tycoon Gordon Gekko stepped onto the silver screen to announce, “Greed, for lack of a better word, is good.” It is no wonder why people hesitate to embrace capitalism, and why Christians in particular have trouble understanding how a system fueled by greed can be compatible with biblical principles. I would stand behind every word of this clip had the director—himself a socialist—chosen to use “capitalism” instead of “greed.” Let that be a lesson: Do not leave the task of free enterprise advocacy to Hollywood. Philosophers and theologians throughout history have contributed to a rich repository of arguments for human dignity and relational ethics. The assertion that we are driven merely by selfishness, and that this is a good thing, appears misguided on its face and leaves distaste for any social system based on such an idea. To set the record straight, greed is never good. And before any conversation about alternative economic systems, we must understand that no system can get around human nature—greed will play a role in any social structure. What kind of role will depend on the particular structure. As markets rely on trust and cooperation, unmitigated greed has the potential to undermine a free economy. On the other hand, capitalism is the system best equipped to channel greed into more productive ends by providing a way for individuals to make unlimited profits through production and exchange rather than stealing. Greed, one could say, is less destructive under capitalism, but still not “good.” Why the confusion? Behind this misconception is a reckless interpretation of the economic principle of “self-interest.” It was Adam Smith who argued, “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” Self-interest also plays a starring role in the political work of John Locke and David Hume, yet none of these philosophers viewed it in the same manner we view selfishness or greed today. Rather, they understood it to be the underlying motivation to most human action. Self-interest, rightly conceived, is about self-preservation, responsibility and increased quality of life. It is self-interest that motivates us to get up and go to work, tend to our home, care for our children, seek education and follow doctors’ orders. The natural desire and core motive of human action is simply to better one’s condition. Furthermore, self-interest does not exclude charitable behavior. In “An Economic Theory of Democracy,” Anthony Downs noted how “self-denying charity is often a great source of benefits to oneself.” Both Locke and Hume call for individuals and societies to be resourceful, efficient and always caring for those in need. There is far less room for charity if we conceive of self-interest as it is portrayed by Machiavelli or Hobbes, who imagine humans as brute creatures driven by appetite and vice. In their world, fear and power rule the day. Unfortunately, this view is all too common. The Difference There is a difference between loving yourself exclusively, and “loving your neighbor as yourself.” In the former, you stand as the sole intended beneficiary of your actions, regardless of harm to others. In the latter, one’s motives encompass loved ones, friends, strangers or even enemies (John Mueller’s “Redeeming Economics” is a brilliant piece of work on this notion, rooted in the natural law of St. Thomas Aquinas). There is nothing wrong with seeking recognition for a job well done in hopes of a promotion. But it should be done without tearing down one’s co-workers. There is nothing wrong with accumulating wealth, but when possible, store savings in an interest-bearing account where it can be accessed by others. The parable of the talents applies here. The Ebenezer Scrooges and Bernie Madoffs of the world give capitalism a bad name because, as some would suggest, their greed epitomizes the problems inherent in capitalism. But would we say the same for Bill Gates and Steve Jobs? Do Jim Cramer and Dave Ramsey give millions of people financial advice because they are greedy? Are you selfish for going to work or school, preferring tasteful food to bland, or driving a car instead of public transportation? For many years the Catholic Church believed profits and pleasures were unfit for Christian life, but theologians corrected this view centuries ago, paving the way for Western progress. We are free to seek improvements to our lives—the pursuit of happiness, if you will—provided that we are not denying the same for others. Beware the Straw Man Only if we understand self-interest in this way can we make sense of law, ethics, economics, international relations and the realities of the human experience. The argument that capitalism is based on greed is a “straw man” that is not only inaccurate, but suggests that alternative systems are somehow friendlier. Correcting this misunderstanding is one important stepping-stone between Christian values and free enterprise. “Greed” seeks pleasure at the expense of others. It is a part of human nature—a fact recognized and redirected by capitalism. But a sustainable free economy is based on individuals pursuing their interests with goodwill and social responsibility constantly in view. The moral case for free enterprise is incomplete without this often overlooked but vital arrow in the liberal quiver.