I’m not sure which economists David is talking about when he says “we” talk about greed? Hayek? Adam Smith? Milton Friedman? Thomas Sowell? Me? There is nothing I have learned in economics that rests on a fundamental axiom of greed. Self-interest perhaps, but greed no. They are not the same.
Deirdre McCloskey kicked off the first annual James Buchannan seminar this past Friday.
McCloskey… tackled the virtues of economics and how economists focus too much on "prudence." Prudence is a strange virtue in that it descibes a sort of patience and sound judgement, in other words things that are smart to have in them of themselves. The other virtues are good--if that's the right word--because they help others. Prudence, in its most basic form, helps the actor only.
Economists talk about prudence a lot and we have different names for it. Self interest. Risk-aversion. Rational expectations. The other thing we talk a lot about is greed, much to McCloskey's dismay.
Self-interest is the desire to better oneself and one’s living conditions. I and most others I know would view this as a good thing as long as it is not done while harming or at the expense of others. Rather than defining greed, let me turn to two online dictionaries.
Webster defines greed as:
Dictionary.com defines it as:
excessive or reprehensible acquisitiveness
I see no virtue in either of these definitions and can easily imagine that a random survey of people on the street would yield the same opinion. Very few people outside an economics department would put greed on a list of virtues. (Unfortunately, David’s point and McCloskey’s fear is that many economists would.)
An excessive desire to acquire or possess more than what one needs or deserves, especially with respect to material wealth.
This is not greed, but self-improvement. If it is desiring a better life for others, then by definition it is not greed. I must say that I don’t think I have ever heard of Greed as being holy before. I don’t think David actually means that greed is worthy of worship?
She feels greed is not a dimension of capitialism and capitalism requires all the virtues. Vices have no place in genuine free market activity. I take issue with this. Not only does greed play a fundamental (and moral) role, the flavor of greed economists talk about captures the very virtues McCloskey thinks we are ignoring.
Greed can be quite holy. Most generally it is about desiring a better life (usually for yourself, but it can also be for others).
David is illustrating the very point McCloskey is trying to make – taking the rhetoric of “greed is good” to the extreme leads to the elevation of greed and money into the transcendent. Theologians would call this making a God of money. Christians would call it the worship of Mammon. Whatever way you want to call it, placing our Faith and Hope in money rather than a higher good is precisely what McCloskey (and I) fear will happen when economists focus on human beings as being mono-dimensional utility maximizing agents with no considerations beyond the betterment of their own conditions with no regard to others. Very few people I have met in life fit so narrow a description. Very few outside the economics profession view people in so narrow a way and not many economists I know do so either.
This is Hope. It also must, by definition, include the idea that people believe money (or whatever tickles their fancy) is a means to the end that is the better life. This, for a lack of a better word, is Faith. (We can expand the means framework beyond "money" to explain suicide bombers and so forth, again finding they have faith that their strategy will grant them what they hope for.)
Economists often use self-interest as a simplifying assumption and evaluate how the world would be if people tried to maximize their own “utility”. Basically saying when people are given a variety of options, they will choose what they think will bring them the highest expected satisfaction among the alternatives before them. That doesn’t sound like greed, but more like wisdom (or prudence) to me. It also doesn’t account for the whole range of human behavior.
Unfortunately, there are a number of economists who do focus on a narrow definition of self-interest which is basically synonymous with greed. Ayn Rand became very famous for holding this position. This is absolute contradiction to how the founder of economics, Adam Smith, viewed human behavior and human virtue. Smith wrote extensively on other virtues as well and viewed humanity as very multi-faceted and rich in depth. (Read “Saving Adam Smith” for more thoughts on this or, better yet, check out the “The Theory of Moral Sentiments” by Smith himself.)
I certainly agree with Smith and McCloskey on their more complex view of humanity. It would be very difficult to explain the deeper human experiences of love, sympathy, friendship, faith, respect, dignity, justice, reciprocity, etc. purely through the dimension of prudence or self-interest. It would be even more difficult to explain these through the “virtue of greed”.
This indeed is Justice and is outside the realm of Greed. David is actually underscoring what McCloskey said – more virtues than Prudence are needed to describe the ethics that humans should follow.
We economists talk about the ethics of greed, we do not say greed is always good. We agree that taking others' stuff by force is not a moral manifestation of the so-call vice. Greed must be the motivation for trade (not theft) for it to be ethical. This is Justice.
Again, David reaches outside the scope of Prudence to describe (and support) what McCloskey was saying. Courage is a virtue and when combined with Prudence and Hope leads to risk-taking and new ventures. This is a wonderfully necessary part of entrepreneurship and needed for our economy to grow.
Greed also generates Courage, for it is what motivates people to take chances and stand up for what they believe in, and Temperance, for those that are too "couragous" don't achieve their desires.
I disagree with David, however, when he says that these virtues emanate from Greed. There is nothing magical about a lustful desire for wealth that would suddenly give an incredibly risk-averse man a spine of steel. Courage is a virtue that needs to be taught and cultivated separately from Prudence. As is Temperance (self-control). It is easy for me to imagine a greedy individual who takes great risks to gain money, only to fail and kill all of his underlings or enemies in a fit of rage. (Think about any low-budget action movie you’ve seen with a bad guy who kills all his underlings in a fit of rage after the hero thwarts his attempts at gaining wealth. I’d argue the bad guy had Greed and Courage, but no Temperance whatsoever.)
I think David makes his biggest stretch when he says:
I’ll grant David that Greed leads to (or is) the love for money or love for fame, but how does greed lead to a love for others? Greed requires self-absorption, which is why most people disdain it.
Love is perhaps the most closely connected to Greed itself: Love for money, Love for fame, Love for others.
David closes with this statement:
David may view Quark as a hero to emulate, but personally, I don’t agree.
It's just like Quark (from Star Trek: Deep Space Nine) said. "Greed is the purest, most noble of emotions."
Not to pick on David too much, but while Quark may be his favorite Star Trek character, I was always much more taken by Seven of Nine…