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The myth of greed
Last year’s economic collapse has strengthened what Jay Richards calls the “myth of greed.” Opponents of free markets claim that capitalism is fundamentally based on greed and blame it for the nation’s current economic woes. Last month, Richards, author of Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem, defended capitalism at The King’s College as part of its Distinguished Visitor Series.
Born and raised in Amarillo, Texas, Richards underwent a radical intellectual shift toward socialist thought while in high school. He said he saw socialism as “an extension of the Christian worldview” because of its emphasis on alleviating poverty. He soon, however, realized that although socialism talks about helping the poor, it is powerless to do so, Richards said, because “command economies just couldn’t compete” with free markets.
Richards addressed the common accusation that greed is necessary for the success of capitalism by agreeing partially by saying, “If the essence of capitalism is greed, you cannot be a capitalist as a Christian.” He, however, passionately denied greed as the essence of capitalism by distinguishing self-interest, not greed, as capitalism’s foundation.
Richards also said that the government bears “the lion’s share” of the blame for the economic downturn, citing the government’s subsidization of the housing industry through its implicit backing of Fannie Mae and Freddie Mac: “Government can’t legislate the rules of economics away.” He proceeded to criticize the government’s response to the downturn, saying that instead of the recent stimulus packages, the government should have taken a “cold turkey” approach.
The unfortunate reality, Richards said, is that many government officials “simply don’t understand basic economic principles.” Though free markets will never produce “heaven on earth,” he believes they provide the best way for a people to maintain freedom and the ability to independently improve their lives.
Matthias Clock is a student at The King’s College in New York City.
back to top26 Comments to “The myth of greed”
Thank you for this, Matthias. See Milton Friedman defending economic freedom against the “greed” accusation here:
http://www.youtube.com/watch?v=RWsx1X8PV_A
Also, in a longer interview with Richard Heffner, he explains more fully:
http://www.youtube.com/watch?v=JfdRpyfEmBE
These are both worth the time to watch.
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Still holding to the myth of free-market fundamentalism, I see.
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Friedman won a Nobel price in economics. Epithets such as “fundamentalism” simply cannot compete with substance.
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Spinoza, do you have an argument against anything said in the commentary or the clip?
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Reader – from what I’ve read of Spinoza’s posts, he or she usually does not deal in substantive arguments, but in bomb-throwing and name-calling.
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in bomb-throwing and name-calling.
Different from most conservative Christian comments at worldmagblog how?
Most economies in the world are “mixed economies,” a mixture of free enterprise and welfare state. Free enterprise is one of the most effective ways there are to stimulate creativity and enterprise, but it does not solve all the problems facing society, so that is why in the real world we usually end up with tinkering and a mixture, but in forums such as this we end up with mostly posturing and sloganeering.
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Random – speak for yourself.
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Different from most conservative Christian comments at worldmagblog how?
So if you are that put off by conservative Christians, why do you bother to hang around here? Do you feel like a small person inside and it makes you feel bigger to get on a blog like this and denigrate Christianity and its adherents?
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Buzzy, get a grip.
why do you bother to hang around here?
In the immortal words of Victoria, Why not?
Also, keep friends close, enemies closer.
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Random – I have a grip, and your answer is unconvincing. I think my theory is more plausible.
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Oh man, there are so many things going on in this article, where does one start?
1) The boundary of greed and self-interest is an important one, even critical. The fundamental problem is not so much greed (actually, it is an incidental), but that of the asymmetry of information/power. Market actors with great power have a vested interest in exploiting the system to their own ends — normally this is checked by competitors, but where we start dealing with rather opaque investment instruments; or where we are faced with other concerntrations of information or economic power, then it seems incontestable that people will act to their own self-advantage. The huge paydays of some seem testimony enough to this.
2) Richards believes that the problem was merely with subsidized mortgages. This however, is denied by the actual facts of the case, where most of the problem mortgages were being generated by unregulated brokers (e.g. Countrywide and the lot). Moreover, this misses the role of leverage and hedge funds. Here, the article from yesterday’s WSJ (”Crisis Compels Economists to Rethink Paradigms) is really quite good. Richards is too simple by half.
3) and back to greed. Read through the comments on the WSJ article, one repeatedly runs into the recognition that many players in the financial sector were motivated by — ready? — greed. Anecdotal, but there it is.
Finally, may I point out that Dr. Richards is not especially positioned to offer economic commentary: he’s a theologian, as his c.v. makes clear.
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If the gov’t understood economics, they wouldn’t spend more than they can squeeze from people.
As someone said recently, while she does give to the poor, poor people can’t give her a job. Only rich people can give her a job; therefore, why should she hate them.
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If you talked to any economist who isn’t on SHIP OBAMA, they will tell you what has been done and what is being done is wrong for the economy.
Even Greenspan said Fannie and Freddie were setting themselves up for a fall. He foresaw the fall, but no one listened. Then later he was blamed for the crash. There is video confirmation of that.
If ANY of the people in control in Washington were economists, would we be in the position we are today.
It seems that too many running our country are about GREED (not just in Washington).
It would have been cheaper to buy each person a home and a car. But Washington OWES too many rich people who contributed to their campaigns. They give to their own first and if any trickles down they can call it jobs created, or stimulating the economy.
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Progressives (who are not progressive about anything) think that if they can call the other side “greedy”, this means they are not greedy, or at least maybe no one will notice their greed. One of the most greedy men around is George Soros, an Obama funder.
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“Richards underwent a radical intellectual shift toward socialist thought while in high school”
In other words, he was an average teenager???
I like capitalism fine and I love Jesus, but even tangentially implying the two are related is dangerous. Christ is above all systems of government. And yes, he cares more about what’s in the heart of the slave than the fact that he is, in fact, enslaved. Of course, by the same token, the slave’s taskmaster will have a heavy reckoning to make.
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If Richards claims that self-interest not greed is capitalism’s foundation then you still can’t be a capitalist Christian. A follower of Christ must deny self, i.e. not be self-interested. Luke 9v23-25
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good point, John
still, as this article http://online.worldmag.com/2009/09/15/capitalism-and-greed/ points out, sex (gift from God) and economic freedom (gift from the founders) are both good things that we can use as we choose – for good or evil
Madino, I find being a capitalist Christian the most natural thing in the world – denying self does not mean taking no care for self and family
God would not be happy if you make your health an idol but He would not like you to stop brushing your teeth
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Reader, exactly! The motivation for looking after your health is not because of self-interest or self-love but because of wanting to please and honor God through respecting what is His. For followers of Christ, taking care of yourself and family is of equal importance to caring for others (love your neighbor as yourself). A distinguishing characteristic of Christians is love for God, and love for others. If the foundation or basis of capitalism is self-interest and self-love then that is simply not consistent with following Christ.
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@John M: how can you say that Christ is “above all systems of government”? That sounds like saying that Christ has nothing to do with government, a demarcation argument. Christ is lord of all, including governments.
Here are some biblical principles for governments:
“you shall not be partial to the poor or to the rich” (Ex 23:3,Lev 19:15) One law for all, not special laws that favor the poor. Some Christians only read half these verses, about not favoring the rich.
“you shall not covet your neighbor’s property” (Ex 20:17, Deut 5:21) Rich people are allowed to have things you don’t have. The biblical basis of capitalism.
“While it remained unsold, did it not remain your own? And after it was sold, was it not at your disposal?” (Acts 5:4) Private property is a right: the community of Acts was voluntary, not compelled.
“he shall not acquire for himself excessive silver and gold” (Deut 17:17) A Christian principle is “absolute power corrupts absolutely”- putting ever more power in the hands of government is a recipe for tyranny, because people are sinful. The more handouts, the more power to those doing the handing out.
“He who does not work shall not eat” (2 Thess 3:10) There should be no reward for laziness.
This sounds a lot like capitalism to me! Call it what you will, Christ is not irrelevant to government.
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Snoke, Just because “Christ is lord of all” doesn’t mean Christ has an opinion about everything. The teachings of Christ are about as relevant to what government I live under as they are relevant to what I name my cat or what brand of toilet paper I buy. Pretending that every little detail of my life or that of my nation has some kind of cosmic significance is not biblical, it is hubris. God does not love America better than other countries.
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@Snoke, you could use the exact same Bible verses you quoted in support of Capitalism to endorse Communism.
Sorry, but “Absolute power corrupts absolutely” is not a Christian principle. “All have sinned and fall short of the glory of God” is.
It doesn’t matter what system it is, capitalism or something else, if it involves people then it will be flawed.
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Exactly, Madino, since all are corrupt, it makes sense to disperse power through individual decision making in the market instead of centralizing it in a few hands through government planning
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Greed can occur in a socialistic market just as easily. What is to stop the government officials from being so, or manipulating it to their advantage?
Greed will occur under any market. Capitalism or the freer market, weeds it out. Greed has only been rewarded and sustained by our government’s socialistic response in bailouts, in which they helped create as well.
High leverage is always motivated by greed, but if you reward it, you have taught it nothing.
There is nothing wrong with making money, or investing in something or someone, but in doing so comes risk, and in doing so comes the understanding that you may not see a return.
Government should prosecute the criminals, allow the failures to fail, and allow the successes to succeed without penalties.
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“I like capitalism fine and I love Jesus, but even tangentially implying the two are related is dangerous. Christ is above all systems of government.”
Capitalism is not a system of government. It is primarily an economic theory that describes how markets work to produce wealth through a spontaneous ordering of transactions between producers, distributers, and consumers, where each person involved in a transaction makes necessary tradeoffs with others. Because the overall complexity of its many layered transactions is beyond the ken of any individual or panel of experts, attempts to regulate the overall results tend to distort, rather than correct perceived inequalities. This is as true of governmental intrusions into the marketplace (laws that punish fraud and make contracts enforceable do not alter the marketplace, but ensure the transparency and accountability that lubricate its machinery) as it is of prvate actors trying to monopolize power and information.
Markets are self-correcting as technology changes. The fur trade, railroads, steel mills, have first dominated and then receded as producers of vast wealth. The Hudson Bay’s monopoly on beaver pelts affords little advantage today.
Capitalism as a theory is descriptive. Governments that draw on its principles as prescriptive, produce the fewest distortions in economic activity, and provide the richest environments for human flourishing and personal liberty.
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While I agree that there is an aspect of self-correction in the markets, that doesn’t really excuse the Christian. The terrifying part about such corrections is that sometimes whole economies do get blasted; people lose jobs; towns their commerce. Moreover, sometimes the seeming prosperity of the market comes at longer-lasting problems such as pollution (in Michigan we are still cleaning up after the lumber and paper industry, both now gone).
These externalities give pause. And for the Christian, the impact on lives will play a role on the degree of intervention.
To bring it around, when these industrial changes come with leverage — that is, with the real possibility of significant rewards, it becomes easy to see how the reward for the investor comes at the expense of the worker (who loses the job). As a moral consideration what are we to make of this investor’s role? Is it really neutral, a matter of self-interest akin to sex (’birds do it…’ I start to hum)? Or can we tell the investor that at this point the pull of riches may not only harm him (that’s greed, for you), but others — that’s GREED, for you too.
I’m not making the sappy moral comparison (Capitalism=bad, greedy, etc), but just noting that economic decisions may have social consequences. As a Christian, we are challenged to think of the whole, not simply our little part.
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Great clarification Ken, put much better than I could. Thanks!
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