September 19, 2010

Greed Is Great

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In case you didn’t notice, Cornell hosted two career fairs last week. The streams of suited students coming to and from Barton Hall reminded us that even though some Cornellians rail against the evils of corporate America — arguing that it runs on “greed” and produces no real value — a larger number are still willing to jump onto its bandwagon. Can we justify this trend?

In a Sept. 12 editorial about executive bonuses, entitled “Wall Street on Tower Road,” the paper made the classic moral argument against super-capitalism, remarking that bonus compensation was “outlandish” and reflected a  disturbing “underlying philosophy.”

It’s clear from the title of the editorial that this “underlying philosophy” is synonymous with the “greed is good” mentality espoused by Gordon Gekko in Wall Street. As that film implied, the Sun argues: Greed is not good. And, the argument continues, since capitalism often rewards greed, capitalism and the culture it fosters are also not good.

This argument was supported by a 1993 study by three Cornell professors on the effects of studying neoclassical economics — the social science that takes selfishness as given. They showed that, on average, economists are less charitable and cooperative than non-economists, thus demonstrating that capitalism can promote antisocial behavior.

Assuming that the study and its methods were perfectly sound — a step that, in my mind, takes some serious leaps of faith — a simple question yet remains: Why is greed really all that bad?

I think, in fact, there are a number of perspectives with which we can view greed more favorably. The first was noted by the eminent economist Milton Friedman, who, when asked if he had any reservations about the primacy we give greed in our capitalist system, argued that every political system — be it communist, socialist or capitalist — runs on greed, or, in his words, “individuals pursuing their selfish interests.”

Greed, he argued, is neutral. It is a reality we must confront, rather than an annoyance we can brush aside. The real challenge, then, is how this greed can possibly bring about an improvement in society’s fortunes.

This puzzle has been solved by neoclassical economists, who for centuries have been demonstrating how the pursuit of individual self-interest can lead to mutual gain and increases in standard of living. This idea has become almost axiomatic: just look at any introductory economics textbook.

But we still must address the claim that greed creates uncharitable individuals. Therefore, we should first note that it is not necessarily true that a society that exhibits consumptive greed must be uncharitable. Case in point: We consider the 1980s the “decade of greed,” when, spurred by economic growth, American consumption greatly increased and Wall Street culture became a more prominent fixture of American life. However, as UC Irvine professor Richard B. McKenzie noted in 1992, “[charitable] giving in the 1980s was above the level that would have been predicted from the upward trend established in the previous twenty-five years.” The “decade of greed” was simultaneously the decade of charity.

This is not to make a causal argument: I don’t think it’s been established that more consumption will by itself lead to an increase in charitable giving. But it certainly is the case that the enormous wealth generated by capitalism allows us to be more charitable. In this sense, greed affords us the possibility of generosity.

However, it by no means guarantees it. Indeed, though capitalism provides us with significant means, it cannot tell us what to do with them on an ethical level. Capitalism, as Paul Krugman has argued, is a fundamentally amoral system. It does not, and cannot, tell us how we should interact with one another.

To fill this gap we need the guidance of communal institutions — houses of worship, community centers and universities. All enable us to think thoroughly about the ethical use of our resources, and all, in turn, require the financial support made possible by the growth imperative of our capitalist system.

Therefore, though it may sounds strange, selfishness can ultimately help us enrich our moral lives. Just keep that in mind the next time you scoff at the suits coming in and out of Barton Hall.

Judah Bellin is a junior in the College of Arts and Sciences. He may be contacted at judahbellin@cornellsun.com. For Whom the Bellin Tolls appears alternate Mondays this semester.

Original Author: Judah Bellin