Freeman

ARTICLE

Greed and Gravity

Is Self-Interest a Corrupting Influence in Society?

OCTOBER 01, 1995 by DWIGHT R. LEE

People have a tough time discussing self-interest in a morally neutral way. While morally charged arguments about self-interest can be philosophically intriguing, they are usually beside the point. Self-interest, or greed as it is often called, is like gravity: a pervasive force remarkably unaffected by philosophical discussions of right and wrong. When confronted with such a force one should recall the Alcoholics Anonymous prayer, “Lord, give me the courage to change the things that can and ought to be changed, the serenity to accept the things that cannot be changed, and the wisdom to know the difference.” Discussions of self-interest typically reflect little serenity and even less wisdom.

Although self-interest does have its defenders, its detractors are far more numerous and influential. Self-interest is commonly seen as a negative characteristic that people should try to overcome. In this view, self-interest and greed are synonymous, and the world would be a better place if people discarded them as they would bad habits. Some people distinguish between greed (bad) and “enlightened self-interest” (good). But the person who applies the adjective “enlightened” often does so to champion action that he approves and which commonly does more to promote his well-being than that of those urged to take the recommended action.

The defenders of self-interest base their arguments on deeper philosophical insight into human nature, and have made a strong case for narrowly focused self-interest—what most people would refer to as greed. Those who defend narrow self-interest recognize that people are capable of malevolence as well as benevolence when concerning themselves with the interests of others. And given the history of man’s inhumanity to man, malevolence is probably a stronger impulse than benevolence.

In Defense of Commerce

Indeed, the major advantage some eighteenth-century writers saw in the emerging market-based economy was that it motivated people to substitute commercial avarice (or greed) for more disruptive passions, such as the lust for power and conquest. This view was succinctly captured by Samuel Johnson when he observed, “There are few ways in which a man can be more innocently employed than in getting money.”[1] In his famous 1748 treatise, Spirit of the Laws, the French political philosopher Montesquieu stated: “It is almost a general rule that wherever manners are gentle there is commerce; and wherever there is commerce, manners are gentle.”[2] The Scottish historian William Robertson wrote in 1769, “Commerce tends to wear off those prejudices which maintain distinctions and animosity between nations. It softens and polishes the manners of men.”[3] More recently, even John Maynard Keynes saw virtue in narrowly focused self-interest:

 

Dangerous human proclivities can be canalized into comparatively harmless channels by the existence of opportunity for money-making and private wealth, which if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of personal power and authority, and other forms of self-aggrandizement. It is better that a man should tyrannize over his bank balance than over his fellow-citizens. . . .[4]

But the defenders of self-interest, and their arguments, are not widely known. Most people see the defenders of self-interest as villainous characters. Certainly popular entertainment promotes the view that self-interest, particularly commercial self-interest, is a corrupting influence in society. According to one study, during the 1980s almost 90 percent of all business characters on television were portrayed as corrupted by greed.[5]

Politicians do the most to foster and exploit the negative view of self-interest. They constantly rant against the greed of those who put their private interest above the public interest. Invariably when a politician engages in such a diatribe, he is rationalizing the failure of some public policy that he favors. Few things would do more to discredit silly political statements and derail pernicious public policies than to recognize that self-interest is not good or bad, it just is.

Imagine an aeronautical engineer who kept designing airplanes that either never got off the ground or crashed almost immediately if they did. Consider our response to such an engineer if she claimed that there was nothing at all wrong with her engineering, and that her planes would fly just fine if it weren’t for gravity. She would immediately be dismissed as a raving lunatic. But is her argument really any sillier than those we hear from politicians and statist policy wonks every day?

Recall the recent health-care debate. Government policy has led to health-care arrangements where most medical services are paid for by third parties, with neither patients nor physicians having much motivation to take costs into consideration. The predictable result has been escalating prices for health-care services and, of necessity, increasing health-insurance premiums. But the constant refrain from the health-care engineers in Washington is that the problem is greed, not the collectivization of healthcare decisions. Indeed the recommendation has been for more collectivization. The recommended health-care system would work just fine, with the finest care at the lowest prices for all, if only physicians, drug companies, and insurance companies weren’t so greedy.

As government has grown larger, controlling an increasing share of the national income, organized interests have predictably devoted more effort to influencing government policy. The noble objectives that it is easy to imagine being achieved by an expansive government invariably fall victim to perversities of interest-group politics. Yet good-government types are convinced that bigger government could be the source of bigger benefits if only the greedy special interests would quit putting their narrow concerns ahead of the general welfare. Greed is the problem, not the design of government programs and policies. So all that is needed is the right campaign reform and lobbying restrictions to banish the corrupting influence of greed from politics.

Other examples could be given of social engineers blaming greed and self-interest when their policies fail to achieve liftoff, but the point is clear. The public would be well served if politicians and policy makers began recognizing that self-interest is not good or bad, but an unalterable fact of life. Until they do, they will continue to design cumbersome and costly public policies that do far more harm than good, and then blame their failures on greed. []


1.   James Boswell, The Life of Samuel Johnson (Middlesex, England: Penguin Books, 1979), p. 177.

2.   Quoted on p. 1464 of Albert O. Hirschman, “Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble,” Journal of Economic Literature, December 1982, pp. 1463-1484.

3.   Quoted in Albert O. Hirschman, The Passions and the Interests: Political Arguments for Capitalism Before Its Triumph (Princeton University Press, 1977), p. 61.

4.   The General Theory of Employment, Interest and Money (London: Macmillan, 1936), p. 374. Also quoted in Hirschman (1977), op. cit., p. 134.

5.   See page 146 of Robert Lichter, Linda Lichter, and Stanley Rothman, Watching America (New York: Prentice Hall, 1990).

ASSOCIATED ISSUE

October 1995

ABOUT

DWIGHT R. LEE

Dwight R. Lee is the O’Neil Professor of Global Markets and Freedom in the Cox School of Business at Southern Methodist University.

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