In the 1987 classic, Wall Street, Michael Douglas makes the controversial claim, “Greed is good!” When you first hear those words they sound almost contradictory, “greed is good?” you might think, “that’s absurd! In our culture that’s almost as crazy as saying that bad is good!” However, this speech actually has a good grounding in political thought.
Cover of Wall Street (20th Anniversary Edition)
The Grumbling Hive
In Bernard Mandeville’s The Fable of the Bees, written in the early 1700s, Mandeville describes a hive of bees that serve as an analogy for London. In the beginning, these bees are full of vice and the hive hums along productively. However, once they realize that they are “wicked,” they pray to God to make them virtuous, which God then does and everything falls to pieces. Essentially, without greed or the desire for more than is necessary for life, the bees regress into — well — bees in a stump. For Mandeville, the “private vice” of greed had enormous “public benefits.”
Writing just 50 years after Mandeville, Hume took Mandeville’s idea that the public benefits from private vices and expanded upon it. Without getting into all the details, Hume argues that greed drives people to work harder and fuels innovation. Without greed, according to Hume, people would work only hard enough to secure food and shelter for themselves, which in turn means that no one produces excess food. Not only does this leave the entire human race vulnerable to the whims of nature, but it leaves no room for art, science, music, or any number of other things that most people would definitely agree are good.
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Basic Assumptions in Economics
However, you might say, “that’s all very well. They have pretty theories but I’m still not sure I buy it.” Well, if that’s the case, let’s step back from the historical examples for a moment and consider some of the basic assumptions in modern economics. Economics assumes that people are rational and defines rationality as, “the perceived benefit for some action is greater than the perceived cost.” This implies that there is no such thing as a selfless action, and could even be taken to mean that all actions are greedy. Also, because we gain “utility” — a kind of made up currency that measures happiness — by getting more money, economics essentially correlates money to happiness, or at least perceived happiness. Some modern scholars, however, challenge these assumptions because the success of economics in predicting the outcome of a given market is a powerful argument in its favor.
A Modern Example
Let’s move even further into familiar waters with an example that hopefully you get to experience in real life. Pretend for a moment that you have just won a progressive jackpot and are now a multimillionaire. Would you be happy about it? would you consider it a good thing? Perhaps most importantly, would you give all but the bare essentials away to charity? I am guessing the answers to those questions — almost unanimously — go: yes, yes, no. I know that’s what I said, and I don’t blame either you or myself for answering that way. You know why? Because greed can sometimes be good.