The Role of Greed in a Capitalist Society
Introduction
Much has been said about the role of greed in a capitalist, free market economy. Some believe that greed fuels the economy. Others say that it undermines the value system that drives the economy. Adam Smith said that, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest" (Smith, 1776: 26-27). This statement explains that it is the self-interest of individuals that causes people to trade. This trade pushes an economy in a forward progression, which creates a more profitable living situation for the individuals in the economy.
Yet Smith also stated that an individual could either pursue the study of wisdom and virtue or the acquisition of wealth and greatness. In this context, one individual may choose to follow riches, which would in turn create a confidence in trade and the economy. The confidence of this person would strengthen the economy of that country. The other person may choose to attain wisdom and virtues. This person is notably less concerned with securing financial wealth (Smith, 1759: 62). Does this then mean that their lack of concern with material gain will work against the economy?
It is my thesis that greed does not fuel the economy, but undermines the value system on which capitalism (according to Adam Smith) was built, and a good example of this today is child labor. I plan to argue that Smith’s case for pursuing self-interest only works in the context of a wealthy society. He understood that there was more to life than amassing wealth, but he did not consider the plight of those in abject poverty. Using Biblical principles, new theories on democratic capitalism, and real life examples I hope to describe how greed undermines capitalism and that the free market economy is driven by a good work ethic, delayed gratification and the virtues of individuals. These qualities can better provide the wealth of life that Smith describes in both The Theory of Moral Sentiments and The Wealth of Nations.
Background Information
The Theory of Moral Sentiments was Adam Smith’s first book and it was first published in 1759. He was appointed to be the Chair of Logic at Glasgow in 1752 and then moved to the Chair of Moral Philosophy in 1752. He was teaching subjects such as natural theology and ethics before moving into law and government.
Greed and incentives are two terms that each play a role in the other. Incentives are sometimes rewarding and sometimes punishing. Greed is intense and selfish, but is it really bad? By looking at it from an economical perspective, one can see how forms of greed and incentives play a crucial role in the free market society.
Miller, Kenneth R. and Joseph S. Levine. “Chapter 12: DNA and RNA.” Biology. Upper Saddle River: Pearson Education, Inc., 2002. Print.
Carnegie, Andrew. The Gospel of Wealth. 391st ed. Vol. 148. N.p.: North American Review, 1889. Print.
“Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction.” -Erich Fromm
The terrorist attacks of September 11, 2001 were horrific and traumatic events that affected not only the United States but had global ramifications as well. The events of that day produced immediate and long term effects on numerous aspects of society. The human tragedy in the loss of human life was immeasurable. The societal effects of 9/11 continue to be present even today as the war against terror continues. It is difficult to measure the societal impacts, but the economic cost of the attacks, have been and continue to be measured.
Let’s get started with Adam Smith and his second coming. Adam smith was one of the greatest economics minds that have ever existed, teaching us that our wealth is not just in gold and silver but in the products that we produce and commerce we engage in! Much like today we can understand
The stock market remained closed from September 11th until September 17th, almost a week after the attacks. When the markets re-opened after a weeklong absence, people were uncertain about what the numbers would be at the end of the day. Looking back throughout history, after a traumatic event such as the bombing of Pearl Harbor in 1941 and the Gulf War, the markets tended to go down at first but after a few months, they would rebound. When the markets closed on September 17th, the numbers were very bleak. “The Dow Jones Industrial Average was down 685 points, its biggest point drop in history, ending the day at 8,921. The NASDAQ was also down 116 points, closing at 1,580” (Stock Markets Reopen 1). These numbers also represented the major indexes lowest levels in about three years.
Villemez, Jason, and Dalia Mortada. “Chronology of the September 11 Attacks and Subsequent Events through October 24, 2001.” George Washington University. N.p., n.d. Web. 20 Jan. 2014. .
Rich, Tracey R. "Judaism 101: What Do Jews Believe?" Judaism 101: What Do Jews Believe? Judaism 101, n.d. Web. 10 Apr. 2014.
The discovery of new techniques, as well as developing extensive genetic and physical maps have been the primary goals of the project. A detailed genetic map will enable scienti...
In the “Gospel of wealth”, Andrew Carnegie argues that it is the duty of the wealthy entrepreneur who has amassed a great fortune during their lifetime, to give back to those less fortunate. Greed and selfishness may force some readers to see these arguments as preposterous; however, greed is a key ingredient in successful competition. It forces competitors to perform at a higher level than their peers in hopes of obtaining more money and individual wealth. A capitalist society that allows this wealth to accumulate in the hands of the few might be beneficial to the human race because it could promote competition between companies; it might ensure health care for everyone no matter their social standing, and parks and recreation could be built for the enjoyment of society.
Smith stated, “By pursuing his own interest, he (man) frequently promotes that (good) of the society more effectively than when he really intends to promote it. I (Adam Smith) have never known much good done by those who are affected by trade for the public good. ”(Patil) Classical economic theory assumes three basic ideas: Flexible Prices, Shay’s Law, and Savings-Investment equality. Flexible prices in Classical theory suggests prices will rise and fall as needed but is not always true, due to, the interference of government agencies including unions and laws.
Smith's formulation transcends a purely descriptive account of the transformations that shook eighteenth-century Europe. A powerful normative theory about the emancipatory character of market systems lies at the heart of Wealth of Nations. These markets constitute "the system of natural liberty" because they shatter traditional hierarchies, exclusions, and privileges.2 Unlike mercantilism and other alternative mechanisms of economic coordination, markets are based on the spontaneous and free expression of individual preferences. Rather than change, even repress, human nature to accord with an abstract bundle of values, market economies accept the propensities of humankind and are attentive to their character. They recognize and value its inclinations; not only human reason but the full panoply of individual aspirations and needs.3 Thus, for Smith, markets give full expression to individual, economic liberty.
Martin argues this point, stating that, according to Adam Smith, while most likely unintentional, some merchants seek to please customers by benefiting the community in order to increase satisfaction and therefore gain sales (pg. 12) or the rich provide jobs for the poor who need them, thereby distributing wealth (pg. 15). While obviously not an exact science, individuals must consistently seek to moderate between the two sides to keep the marketplace free and energized. David Landes (in Dawson, 2004) suggests that, historically, free enterprise is the most successful driver of wealth creation and, above that, it may also provide “all manner of social advantage within the company, community, and home country.” Dawson (2004) goes on to highlight these advantages include investments in community programs, impetus for social change, a tax base that can be used for public works, education funding, and support for democracy (e.g., freedom from totalitarian
Greed, being a key human condition, has shaped society from the very start. In fact, some scholars believe that greed was the first major milestone of human success, when the first human wondered why he/she had to scrounge around for necessities; it is a part of being human to be greedy. Wanting a new car, to be loved by another, or to desire the feeling of well doing when feeding the needy, these are all factions of greed...