post-autistic economics review
Issue no. 31, 16 May 2005
article 1



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Forum on Economic Reform

In recent decades the alliance of neoclassical economics and neoliberalism has hijacked the term “economic reform”.  By presenting political choices as market necessities, they have subverted public debate about what economic policy changes are possible and are or are not desirable.  This venue promotes discussion of economic reform that is not limited to the one ideological point of view.



Greed (Part I)

Julian Edney 1

© Copyright: Julian Edney 2002-2005



An essay concerning the origins, nature, extent and morality of this destructive force in free market economies. Definitions. Paradoxes and omissions in Adam Smith's original theory permit - encourage - greed without restraint so that in a very large society [USA] over two centuries it has become an undemocratic force creating precipitous inequalities; divisions in this society now approach a kind of wealth apartheid, and our values are quite unlike Smith's: this is an immensely wealthy society but it is not a humane society.  Wealth and poverty are connected, in fact recent sociological theory shows our institutions routinely design inequality in, but this connection is largely avoided in texts  and in the media, as is the notion that greed is a moral wrong. Problems created by greed cannot be solved by technology.  We are also distracted by already-outdated environmental rhetoric, arguments that scarcities and human suffering follow from abuse of our ecology. Rather, these scarcities are the result of what people do to people. This focus opens practical solutions.



Sign the tab in certain Midtown eateries and your neighbors’ eyes slide over. Is that a $48,000 Michel Perchin pen? What’s on your wrist – a $300,000 Breguet watch?


In Palm Springs and Bel Air, $100,000 twin-turbo Porsches and $225,000 Ferraris buzz the warm streets. In New York at an exclusive Morell & Company auction last May, a single magnum of Dom Perignon champagne was sold for $5,750. And there are the paintings of course - one evening at auction two Monets sold for $43 million.2 Hotel rooms, anyone, at $10,000 a night?  Estate agents in suburbs of Dallas and Palm Beach have advertised baronial homes for sale at over $40 million.3


These are prices paid by the exceptionally wealthy, the folks who skim the pages of the Robb Report (average annual salary of subscribers: $1.2 million) in whose glossy pages are reviewed the best of everything. In a recent issue a southern plantation is advertised, "everybody's dream," at $8.5 million.


Robert Reich points out that the superrich live in a parallel universe to the rest of the country: much of the time we don’t see them because they live in walled estates, travel in private limousines and use different airports from the rest of us.4 There’s lots of them. There are now more than 200 billionaires. Some five percent of American households have assets over $1 million. And we’re back to levels of extravagant consumption not seen for 100 years.5


By historical accounts this is a nation of persistent and resilient people with an unshakable mission: the pursuit of happiness. This idea of happiness is largely connected with wealth (and this connection has long philosophic roots). It is a nation of ambitious people with notions of unfettered future growth, a nation that celebrates abundance. There seems to be no reason anyone should be deprived of luxury, if he works hard. Indeed with this country’s aggregate wealth, there should be no reason anyone should ever go hungry or suffer.


People are going hungry in America. A Los Angeles survey found more than a quarter of low income residents, many working, are not getting enough food to meet basic nutritional needs. And 10% are experiencing hunger.6


Estimates are that 3 out of 10 Americans will face poverty sometime in their lives.7


Misery is a word seldom applied to the contemporary scene. Like wretchedness it seems antique, an Old World term. But many Americans live in cold, dank slums; many do not earn enough for shelter, many sleep outside. In America’s inner cities and at its lowest levels, under freeway bridges and in tubercular alleys, in stained and broken rooming houses and in torn-apart schools, misery exists and persists. All our largest cities contain neighborhoods where some people live day to day in apartments that could be mistaken for closets, some fearing to leave home on gang-terrorized streets, some sharing bus seats with people with drug-scarred arms. Every great metropolis has its skid row mired in fecal gutters, where whole blocks are awash in narcotics and violence, its inhabitants despised and flatly abandoned.


America is once again a nation of extremes.



Sealed Off


As this society grows, it becomes more unequal. As aggregate wealth goes up, equality goes down. Our population has soared 13.2% in the last decade alone to 281 million,8 and the wealth has been concentrating in fewer hands (it has since the 1770s9) and the difference between the richest and the poorest is now immense. While the wealthiest individuals count their assets in the tens of billions, the lowest classes are falling. Americans’ earnings are more unequal today than they have been any time in the past 60 years.10 Some corporations' CEOs have been making over 400 times the hourly rate of their lowest worker11 but this inequality is not just a feature of businesses, it spans a variety of professions, perhaps to include my favorite musicians and your favorite athletes. For example, shortstop Alex Rodriguez's $252 million 10 year baseball contract pays him $170,000 per game.12 To a person receiving the average allocation of $83 per month in food stamps, the inequality is astronomical, and the chances of closing it so small it doesn’t feel like a real freedom.


If the best-off are sealing themselves off, the worst-off are also doubly fenced about, this time by the distrust and aversion of those above. Around 20% of American children are living in poverty. An estimated two million are homeless some time during the year,13 including whole families and people who have full- or part-time jobs.14


This is a flamboyantly optimistic and self-congratulatory society, and the puzzle is why it allows this suffering. The inequalities are stunning, but a frequent attitude is a shrug – so what?. These days it is hard to plumb a concern.


Frequently I survey acquaintances with this touchstone question, attributed to Rawls:15 Suppose there are people living on one side of a big city who throw weekly parties so lavish that afterwards they are throwing out meat, while on the other side of the same town are people so poor they cannot afford to buy meat at all. Is this a moral problem?


I get a spectrum of answers: "No problem" to "Yes, of course" and in between "Technological, but not ethical problem," and "Maybe, but (horrified look) what solution are you pushing?" – as well as some yawns, as if these questions were so old fashioned. I believe the variety of these responses eventually leads to the question of what kind of society we live in.



Winner Takes All


My first point is that these extremes of wealth are connected. While the rich are growing richer, the poor are growing poorer,16 and this is no coincidence. But we largely deny the connection. This is a society which, as the divide between the happy and the abject grows, tries, now by education, now by medication, now by paradox, now by distraction, to avoid the inhuman consequences of its collective actions, and in the end – because none of those strategies is effective – it is one that uses specific strategies for vacating reality.

Defenders, of course, argue that the rich getting richer benefits all, and that in an economy that is an unlimited, growing, open system, all can rise, that (once we get through temporary difficulties) we will find a full and abundant world.


In fact these are not so much arguments as swollen cliches.


There is indeed a problem, and it has a history. I will sift the philosophy of utilitarianism and Adam Smith’s founding economics theory for origins. Smith's 1776 treatise, we recall, tied the growth of wealth to the work of common entrepreneurs. It refused the inherited inequalities of aristocracy and with the Enlightenment's notion of reason, a quality accessible to Everyman, it promptly democratized the economy. This philosophy was exported whole cloth to the new America, and it has since grown to dominate our economic policies, its influence is now worldwide. But despite its original claims, we will find it woven with mystical filaments and contradictions. I will show that as the theory is commonly related, it is hard to separate rationality from dogma.


Competition is a fundamental good in utilitarian economics. Competition is a process which results in inequalities – winners and losers. It cannot be, in a society of free competitive units, that competition among all is good for all. Modern analysts Cook and Frank show free market competition has become so stark that we are becoming a winner-takes-all society.17 In a giant economy, aggressive acquisition, greed, where so widespread and popular as to be celebrated, has resulted in colossal differences, so that, as much as we are accustomed to reproaching the Europeans for their inequalities, we are now caught in a lie. We have become more unequal. The United States is the wealthiest nation. But its 20.3 percent child poverty rate ranks worse than all European nations.18


Historians Will and Ariel Durant19 estimated in their survey that the gap between the wealthiest and the poorest in America has become greater than at any time since Imperial plutocratic Rome.




Inequality is a non-issue to the defenders of Smithian economics. The pursuit of excellence makes it inevitable and, they argue, the pursuit of excellence benefits all. So we are hostage to a paradox. As powerfully as we struggle for wealth and happiness we fling ourselves on the axiom that we all are equal, leaving some damage to the national psyche.


The whispered truth is that this nation bent on the pursuit of happiness is not so happy. Suicide afflicts all classes, and suicide rates are now so high as to eclipse homicide rates with three suicides for every two murders. Surgeon General Satcher partially blamed the media.20 Clinical depression is at its highest rate in decades.21 There are unprecedented rates of anxiety, companionship itself is receding, trust is fading.22 Tens of millions are using prescription mood elevators.


Scarcity oppresses. And the worst signs of unhappiness cluster in the lowest cuts: we have among the highest national rates of imprisonment, and the Administration concedes there are 5 million hard-core drug users in America23 and millions of alcoholics, all disproportionately among the poor.


Resonating with the battle cry of the French Revolution, Liberte, Egalite, Fraternite, the American Constitution was written with promises of human liberty and equality. Freedom and equality qualify as the fundamental political virtues. They are the two legs upon which democracy walks.


The second of the promises is broken.


So we first have a philosophical problem: There are many reasons for inequality, but it is ensured in an unfettered materialistic society by a celebrated style of acquisition we call greed. Greed is not just the whimsical excess of the individual. Its most virulent forms are displayed by business groups and corporations – but aggregated, it is an antidemocratic force.


Greed demolishes equity. Simply, you cannot have both unrestrained greed and equality.



Apartheid Economy


The principle of freedom always comes first, argues the Smithian capitalist. But in America, freedom has become something else, a wild individualism24 with a strange amnesia – a disconnect between parts of our culture. A kind of sociopathic haze is settling, helped by mood-altering drugs and television, and appearing in the fashionable cluelessness and chic ignorance - so ubiquitous they have aerated society to numbness. Another facet is the narcissism (to rival one of Dostoevsky's characters so narcissistic he cared more about an ounce of his own body fat than the lives of 100,000 of his own countrymen25). What the free individual chooses to do is now paramount., and the poor understand that detachment is the pivot. Detachment allows the paradox that you can both compete with others but not be involved with what results. The concept of  "the common good"  has almost disappeared, and nobody is his brother's keeper.


Neither are these inequalities an unfortunate by-product of the healthy struggle. Competitive acquisition for the sake of exhibition is again in vogue – and it seems television repeatedly flaunts that on the way to wealth, there are no principles competitors won’t compromise. Besides hunger and fear, lack of health care, decent education and housing shortages, which make living hard, the poor live with brash opulence in their faces. People in decaying buildings daily watch glittering television scenes of shining cars, ocean yachts, and overflowing parties of the rich and famous. Owned by these images, a poor person cannot but feel the differences, and year by year these images add a sedimented frustration, resentment, sense of failure and inferiority which they cannot avoid.


Poverty is also punitive. The poverty-struck family is not just paying the price of its own failure: it is also paying the price of others’ success.


Still, many regard these problems as if they were no more than the economy’s stubble, moles, and split ends.


Second, we have a practical problem. The Durants show a cycle repeating through history. Great social inequality creates an unstable equilibrium. The swelling numbers of the poor and resentful come to rival the power of the rich. As grievances and restlessness grow, government worsens, becoming tyrannical. Eventually a critical point arrives. Wealth will be redistributed, either by politics, or by revolution.



Denying the Shadow


Could it happen in America? To some analysts, it is already beginning. A survey released by the Milton S. Eisenhower Foundation attributes our enduring levels of violence to "vast and shameful inequality in income, wealth and opportunity among urban poor" who are often "trapped in places of terror"26 - inequalities which are simply un-American, opines C. Murphy.27 Troubling studies exist, but we surround this research with technicians questioning methodology and politicians arguing the study represents no reality. There is denial: "Forget the data," asserts one newspaper columnist on poverty issues, "…things have gotten better."28


Finally, this issue is no longer the environmentalist's concern about scarcity of natural resources, nor the population expert's warnings about Earth’s limits to growth. These scarcities are man made, the result of what people do to people. The fact is, far from being an abundant world,

it is a world of scarcity because we calibrate it so. And yet the moral

connection is absent.


Currently our aggregate wealth is like a high tide, covering many unpleasant things on the ocean floor. When there is full employment, we all seem happily raised. But a few years ago the Harvard Business Review carried an article daring to look down: Richard Freeman29 warns that under the surface America is becoming dangerously segregated, forming an apartheid economy, and the lowest are not free to move up. Freeman adds a shadow. He sketches in a huge new group of Americans, the economically sinking workers who are trailing their counterparts in other advanced countries.


Sociologist Derber’s point is that where people are homeless, starving, or jobless, civil society has failed.30


But these demographics will not reverse, because we are a society busily denying its own shadow. In this essay I will pull back the curtain on the irrational in this driving, powerful economy. Instead of an overarching machinery running on smooth technical devices, we shall see a clutter of denial, rationalization, visionary statements and internal contradictions. And the quietness around this topic has another reason. Perhaps we had better be quiet. If we look up, we see Goliath.





Greed vastly predates Smithian economics, of course. It is one of the Bible’s Seven Deadly Sins. Contemporary dictionaries define it as intense acquisitiveness of (usually material) goods or wealth. To dilate: Greed is the acquisition of a desirable good by one person or a group beyond need, resulting in unequal distribution to the point others are deprived. Competitive greed is the same type of acquisition deliberately to create that inequality. Punitive greed is the same type of acquisition deliberately to leave the deprived suffering, powerless or disabled. Sometimes it takes fine grained analysis of circumstance and motive to distinguish these, but all the preceding involve overt behaviors, and the measure is the resulting inequities. Simple greed does not require intention, for instance while continuing to acquire in the face of others’ deprivation a person denies greed explaining he is unaware of results; it is still greed, the measure being the resulting inequity. Next, passive hoarding which perpetuates extremes of inequity previously created is also greed. Next, greed is not always impulsive. It may be planned and calibrated; sustained effort and greed are not incompatible. Next, greed can be exhibited by person, group, corporation, even government. Common observation also shows personality differences. Not everybody exhibits the extremes of greed; but I believe all people act on the impulse at some time in their lives. Separately, greed can be purely mental, a longing, or craving, akin to obsession and addiction, not acted upon, but this is the province of the psychologist.


In practice, as James Childs points out, greedy individuals usually hoard both wealth and power.31


The origins of greed are not mysterious. Like the origins of the drive for power the seeds are everywhere, and if a little bit feels good, more must be better. Previous lack is not necessary to start greed any more than fire is started by lack of fire, but like fire greed expands where it can, it has no internal homeostatic mechanism and the bigger it gets, the faster it grows. Its spread is also quickened by social imitation, akin to panic spreading through a crowd.


Greed is not a rational force.


As a concept greed has largely lost its moral sting. Few contemporary dictionaries include that it is reprehensible. The modern fashion not to sound judgmental, situation ethics, and the habit of social scientists to use past deprivation, social pressure, low self esteem, background, entitlement and myriad extenuating circumstances to explain the behavior, make the moral question so complex, all has crumbled into uncertainty.


This essay resurrects the moral dimension. If the consequences of greed are harm and pain, it is immoral. If greed is flaunted, when the pain is known, it is also sociopathic. These situations are quite common. Anyone doubting the concept of punitive greed should recall that the ancient book by Sun Tzu The Art of War is required reading in top corporate circles.


Not all wealth is created by greed, and not all inequalities are caused by greed, but if you could start with a society of complete equals, unrestrained greed will be sufficient to quickly render that society unequal.


It is also the purpose of this paper to suggest repairs, for which we need to know how our present problems started. Our founding economic theory is tangled.



You had to be Bold


The ordinary test of a philosophy is whether it makes people better and happier, whether it results in prosperity, cooperation and peace. Utilitarianism seemed a swaggering success because it dismantled the smothering pessimism of the Middle Ages, when a social caste system shackled your life chances, church dogma shrouded attitude and thought. Hobbes's dictum at the time was that life for Everyman was solitary, nasty, poor, brutish and short . Our current economic theory is based on a radically different idea.


You had to be bold bringing out new ideas in the European 1700s but they were revolutionary times and philosophers risked their necks pushing some new arguments that people were created equal and each had the liberty to create his own destiny. The French Revolution opened with its violence for equality. In England these ideas took shape as utilitarianism, a put-together philosophy that is neither profound nor poetic, but which was brazenly inclusive, and it confronted  a national system of unbearably elaborate dogma and ancient ritual. Jeremy Bentham, Henry Sidgwick,. J.S. Mill and Adam Smith drew the footings.



Inverting the Problem


Rather than religious, utilitarianism uses secular, psychological motivators to explain human behavior, the emotions of pleasure (happiness) and pain. Pleasure is a good. Its ethics: units of pleasure and pain can be summed and compared, and we should choose the act that results in the greatest good for the greatest number, calculations that any person can do. Utilitarianism is practical, astonishingly democratic, and astonishingly rule-free. The utilitarians bluntly advised governments, let the people alone. Let them be human, doing what they do naturally.


So instead of having high priests and nobility dictating values, utilitarianism promotes the values of science, which are truth, practicality and factuality. Adam Smith’s contribution was a step further, to give happiness a mercantile slant. In the new philosophy there is no conspicuous concern with sympathy, compassion, honesty, courage, grace, generosity, altruism, charity, beauty, purity, love, care nor honor. It accepts that humans are fundamentally selfish and egoistic and that they don’t care about society-as-a-whole. So how does utilitarianism reconcile the selfishness of individuals with the common good - a problem no other social philosophy had solved?


Adam Smith’s breakthrough was inverting the problem. He simply declared that the selfishness of man and the good of society go together. The general welfare is best served by letting each person pursue his own interests. Each unit egoistically strives to better his own lot and maximize his own pleasures. In exerting himself so, he looks for efficiency, for better ways to make money. He’ll invent a better way to cure hides or find a quicker delivery route, for entirely personal gain. But these are soundly rational moves from an economic point of view, and when everybody does this, it sums and spreads through the community, which is improved as if lifted by an invisible hand because no individual intended that end. And we note all of this is achieved without the value of justice, because justice, like the preceding list of noble values, is not a natural quality. It requires rules, and utilitarianism is fundamentally to be rule-free.


Its writers were bold. Utilitarianism pitched a very big tent. As far as theories go, it is fabulously inclusive, reaching down from intrahuman emotions all the way up to prescriptions for nations. For Smith, a country is its economics.


Exported raw to America, this principle spread like wildfire, melding with the American philosophy of Pragmatism. Old morality withered, except where it became an instrument of economic progress. Little of value existed outside of usefulness, and a means-to-ends consciousness became urgent. It also emerged in the national consciousness that this pursuit was unlimited – this was the spirit of freedom.


At the end of the 1800s, enormous business and enormous acquisition was understood as heroic. It still is. We still believe in the invisible hand, and that the outsize wealth of the topmost benefits all. These are the footings of our contemporary capitalistic society and our progress in national wealth has been the awe of other countries.



Lost in the Rout


The typical high school textbook teaches a skimmed version of Adam Smith’s argument that as the rich get richer, it’s good for everybody. Not until he gets to college does the student find complications in Smithian capitalism, such as the persistence of inequalities, and of poverty. If the student pursues the study of economics he will eventually read texts containing "Indifference Curves" which show the economy actually does better with social inequality.32 The original ideal of equality is tainted, the pursuit of happiness is full of conditions.


Utilitarianism runs into trouble with some simple counterexamples.


If we should judge an act by what brings the greatest good to the greatest number (the ‘hedonic calculus’) then, for instance, in setting up a factory to make cheap clothes, the pain caused to employees doing tedious work for low wages is offset by the greater benefit to the greater number of customers who benefit from cheap clothes, and the factory is a good idea.


This example shows how the hedonic calculus is a sum of pleasure units weighed against units of pain. It is a simple additive economics, held to be rational. But in each example, there is no provision for the minority caught offside. Why don’t we have public executions? – the pain to the victim would be more than offset by the summed satisfactions of all the spectators. A second counterexample, in different circumstances: suppose, on a battlefield, a hand grenade is tossed in on five soldiers in a trench. If one of them throws himself on it, saving the lives of the others, the hedonic calculus makes this a good act. But utilitarian ethics is also satisfied if one of the soldiers is pushed or ordered onto the grenade because four lives are still saved at the cost of one. Other philosophical systems would consider that an entirely different act. The usual explanation for these counterexamples is that utilitarianism includes an understanding that we are all enlightened people with civilized motives. Selfish, yes; competitive, yes. But we would never take pleasure from the suffering of another human, and we are not cruel – we are simply not that kind of people.


We are a species of competitives, and each person is inclined to do what benefits him and utilitarianism does not recognize greed nor avarice as moral wrongs. It regards self promotion as rational. It does not list equality as a social virtue. The problem is, utilitarianism is a philosophy with no ideals to offend anybody – just what works.


In the 1800s, through its industrial stage, Smithian economics consumed whole cities, and in the rout, gentlemanly civilities were lost. Some people got prodigiously wealthy, others suffered. But Darwinism was also rising and the robber-baron acquired allies among the Darwinists who held that inequality is an unavoidable fact of nature, so in capitalism’s results, no guilt. It held, there are only the strong and the weak. Historically, it took more than a century after Adam Smith for the western democracies to question child labor. Until that time, the invisible hand justified the misery of legions of ragged and barefoot children whose lives were ruined in dank mills and deep mines, whose profits made Britain and America so powerful.33





In fact there are many ways to crack Adam Smith's theory and John Nash's34 famous mathematical rebuttal is only one.


An elementary rule of logic is that when there is a contradiction anywhere within a theorem, the whole theorem is false.


The center of Adam Smith economics is a paradox. It says, what’s good for the selfish individual is also the common good. Secondly, it says, when you and I are in competition, what’s good for me is also good for you. Those two by fiat.


Next paradox: utilitarianism does have an indirect gesture at equality. The notion is that when many units compete under the same rules of market exchange, the ever-circulating of goods and money keeps the whole system fluid; units are free to enter and exit this system at will. There is only one system, the free market, so we are all in the same boat, so we all must be the same. In practice, of course, history shows us a boat or ship of state with sweating galley rowers down on benches in the bilge, and with people up on deck all dressed in colorful finery, their faces upturned into the glorious sun. Yes, we are all in the same boat. And what is different is supposed to be the same.


The fourth self-contradiction is that free market capitalism is supposed to rectify past inequalities by allowing free competition, which is something that results in inequalities.


Further, Smith’s system cannot be regulated at the extremes where self-interest becomes the greed of not-so-well intentioned entrepreneurs, profiteers in cartels, and of corners, squeezes, and monopoly makers. All of these also want wealth but they are for the common bad.


But here is the most obvious point. Try to fit greed into the hedonic calculus and watch the ethics. Greed is the outstanding moral wrong because it reverses the utilitarian ethic, with greatest happiness for the smallest number.


The most popular way to handle paradoxes are to ignore them, of course. They take thought, and I'll argue later this is discouraged by our culture of bombastically bright entertainment. Another way is to repair them with rationalizations. Historically, the contradiction between the Constitution's talk of happiness and justice, and what was visible to the naked eye, that most workers’ lives were still nasty, brutish and short, was rationalized by saying actually pain and suffering are good because they goaded the poor into greater efforts, thus the economy is energized. And this rationalization thrives today.


Since the promise of upward mobility is axiomatic in Smithian economics, we should take a closer look. Present inequality is vast enough, the chances for the poor to work to close up the gap are long gone. Inequalities of this magnitude tend to become hereditary35 and by and large, the descendants of the American poor will be poor. Upward mobility is a sacrosanct notion in Smithian economics, very widely held because the freedom to move up represents hope - in some people’s minds, this freedom rebuts all criticism of the system. Let's measure this myth. While there is freedom to move up adjacent classes (a stock hand may rise to supermarket manager in a lifetime), the same freedom allows many people also to fall, which is called downward mobility, and which occurs in similar numbers. But the chances of a person born poor climbing all five classes into the top ("making it"), while occurring in a few widely publicized instances, are too small to constitute a real freedom. (Remembering that the top is an extremely thin, long tip to a pyramid,36 one sociologist puts the upper class at roughly 3 percent of the population. About 7.7% of that has moved in from below – a minute, and historically persistent, figure.37 The argument that everyone is free to rise to the top is dismantled in most introductory sociology textbooks - although a student must usually wait until college to read this. But the trick of flaunting possibility to mask actual probability is not a casual device.


These paradoxes are no less nonsensical because they are cross-stitched into the writings of professional economists. Economists have been building on Adam Smith's examples of pin factories and canal barges for more than two hundred years. Our libraries contain shelf upon creaking shelf of intellectual embroidery around these basics. But the end result is that today all we have is a long, groping slavery to principles which don’t work; can’t work; because some of Adam Smith’s axioms don’t even rise to the level of common sense.





A historical detail: one of the popular distractions of Smith's era was spiritualism. The vernacular was everywhere. Rawls has unearthed a minor book in utilitarianism, F.Y. Edgeworth's Mathematical Psychics. In that era, leisure time for the upper classes was spent at seances. Sidgwick was president of a Society for Psychical Research and actually conducted experiments to evoke mysterious forces. Science was in its infancy. And Smith's "invisible hand" is not a scientific principle. It is a mystical concept.


Marx's principles were once the major rebuttal, but now that communism has largely collapsed (of the world’s 260 countries only 5 now are communist) Adam Smith’s doctrine appears to emerge again, as if the winner, a victorious truth. If size is success, the showcase example is today’s megacompany, the corporation "overweeningly powerful and accountable to no one",38 almost magical, because the belief also lives that once a certain high level of anything is achieved, you are invulnerable and above the law. This is a place where heroes live – the Nietzschean mystique – where big things get done, where no one is slowed down by theoretical contradictions.



Money Happiness


Recently, psychologists have provided a decimating argument against Smithian theory. Ryan and Deci39 have summarized a whole literature in psychology on the antecedents of human well-being. Psychologists have always wondered what makes people feel good, and for decades they have quizzed people on the intricacies of happiness. The general answer, all the more reliable because it is based on voluminous and cross cultural research, is that money is not a reliable route to happiness. Happiness is based on other, internal factors. The relation of wealth to well-being is tenuous; only below the poverty line does money bring well-being, above it, increases in personal wealth do not bring increased happiness. A corollary finding is that the more people focus on financial and materialistic goals, the lower their feeling of well-being. Finally, certain people tenaciously believe that money does bring happiness; they are the unhappy. Together, these findings largely dismantle Smithian theory of human motivation. For the present essay it also means that the motivation behind greed, pursuit of material wealth to extremes, cannot be for the happiness it brings. There is nothing heroic about greed. It is closer to obsession.


In fact, after the fall of communism, most of the original problems of industrial capitalism have reemerged too – in different guise. Instead of local factories and mills, we have transnational corporations, just as indifferently employing hordes of unprotected labor, including children, for egregiously low wages in foreign countries.


All notable developments for a philosophy that was invented against privilege and tyranny.



Making It


If we are to build up a system with paradoxes, we must promote contradiction as we go. This begins with the contradictory myths we are teaching our children.


We are currently teaching our young two incompatible morality tales.


Horatio Alger's children’s books from the 1800s tell the story of a boy from ragged tenement origins who struggles from poverty up to riches in an urban odyssey of unflagging effort, single-minded ambition, determination, tenacity and hard work. The boy hero meets tyrannical employers, jealous competitors, wily criminals, prejudice and derision of the poor. He defeats mountainous odds to emerge finally on top, financially successful, pulling his own mother up out of poverty, and this all with his good character intact, in a world where the good guys always win.


The youngest minds get molded around the idea that this sort of ambition makes a person invincible. This myth instills a trust in long term, hard work .


Yet in the same semester our schoolchildren learn the opposite value: how to turn a quick profit using cunning and slick chatter. A contemporary of Alger’s, Samuel Clemens (Mark Twain), wrote luminous country tales, regularly read to children. In one, Tom Sawyer, a juvenile in a mid-nineteenth century American small town, is ordered to complete a wearying chore one beautiful Saturday morning, to whitewash a long fence. But our Tom is a gifted talker, and he figures a way out of the task. As each of his friends comes walking by, Tom plays the work up to be a magically rare opportunity, and his friends, persuaded, compete for a chance to try it, actually paying Tom their toys to let them paint the fence. More friends come by and Tom gets rich from all their prize possessions while getting them to do the work for him until the task is done. The story is imagetic and funny, but it values slyness over effort, and it makes a clear point of getting ahead by exploiting one’s friends. Despite the phosphorescent prose, this tale is about skimming and suckers in a world where the good guys do not win. In it, winners are people who subtly know how to manipulate the wants of others.40


It would be nice if children generalized from Alger and colored themselves all industrious, righteous, honest, rational and forward thinking. But growing up, some of us have absorbed the point that hard work is for dupes, and that out of the sleeve of ambition comes the hand of greed.





The topic of greed battles with a powerful distracter.


Poverty, I have argued, is partly a product of unfettered greed.


But since the 1970s we have been captured in the orbit of a certain kind of argument, that we have poverty and scarcity because our planet Earth has limits and we are running out of food and raw materials.


Actually there is a new consciousness on this point. Analysts Mark Sagoff41 and Bjorn Lomborg42 head this argument. Since the 1970s environmentalists have been predicting energy will be dangerously short because we consume too much. These predictions are framed in phrases of standard economic theory, in material terms, with mathematical projections of dire depletion and collapse of the ecosystem if we continue at present rates. They state we will imminently see starvation among industries for materials, accompanied by starvation among people.


But these predictions simply haven’t turned out. Both analysts document that since the 1970s the world's most basic resources have actually become more abundant and cheaper. There are ultimate planetary limits, of course, but we are nowhere near. Malthusian arguments that starvation exists because there are ‘too many people’ don’t compute. In far too many places where the absolute level of food supply is adequate, there is famine. The world now produces enough food for everyone to have an adequate protein-rich vegetarian diet if the food was equally distributed.


But, says Sagoff, neither technology nor economics can address the major causes of starvation which are corruption, mismanagement, ethnic antagonism, war, trade barriers, and social conflict. Absolute levels of raw resources are not getting worse; what is getting worse is the difference in income between the wealthy and the poor. Technological methods will not bring solutions. Not until we try a solution that turns on the moral will we begin to see improvement.


Scarcity is man made. The whole debate needs a new pivot.


There is a lot of misery worldwide, and the argument that there is abundance for all who would only try is false. We need a new paradigm to explain life-threatening scarcity in the face of plenty.



Part II of “Greed” will appear in the next issue.





1. Julian Edney Ph.D. is based in Los Angeles. (Contact at bottom of this page.)

2. "Fine wines are hot lots at auctions in New York." 2002, New York Times, May 27, P. A 12.

3. Magazine, 12 April 2001.

4. Reich, Robert B, 1991. "Secession of the successful." New York Times  Magazine, January 20, p. 16.

5. Galvin, J. "Wretched excess." 2000, Ziff Davis Smart Business for the New Economy, August 1, p. 122.

6. "Many miss out on food stamps." 2001, Los Angeles Times, June 23. Section B p.1.

7. "3 in 10 Americans face poverty, study says." 1998, Los Angeles Times, August 10, Section A p. 15

8. "State picks up house seat as Sunbelt grows." 2000, Los Angeles Times, December 29, Section A p.1.

9. Converting old wealth into modern terms is tricky but it appears in 1774 the top 1% owned 14.6% of the national

    wealth.  By 1989 it owned 36.3%. In Gordon J.S. "Numbers game," 1992, Forbes, October 9 p 48.

10. Murphey, C. "Are the rich cleaning up?" 2000, Fortune, 24 September. p. 252

11. See for example: Childs, J.M. 2000. Greed. Minneapolis, Fortress Press, p.36

12. Los Angeles Times, 2000, December 12. Section A. p. 1.

13. Profile of the nation: An American portrait. 2000, Farmington Hills, MI., Gale Group. P. 180.

14. "Families total 43% of homeless, survey reports." 1993, Los Angeles Times, December 22. Section A p. 1

15. Rawls, J. A theory of justice. 1971. Cambridge, MA. Harvard University Press.

16. "Study finds widening gap between rich, poor." 2000, Los Angeles Times October 20. Section B p.3.

17. Cook, P.J. and Frank, R.H. The winner-takes-all society: Why the few at the top get so much more than the rest of

      us.  1995. New York. Viking Books.

18. Vleminckx, K. and Smeeding, T.M. (Eds) Child well-being, child poverty and child policy in modern nations. 2001.
      Bristol, U.K.: The Policy Press. (Available from the University of Toronto Press.)

19. Durant, W. and Durant, A. The lessons of history 1968, New York: MJF Books.

20. Surgeon General aims campaign at rising suicide rate. 2001, Los Angeles Times May 3. Section A p. 14.

21. Lasn, K. and Grierson, B. "America the blue." 2000, Utne Reader. September. P.74

22. Lane, R.E. The loss of happiness in market democracies. 2000. New Haven: Yale University Press.

23. America Online News, 2001, by Scott Lindlaw. 10 May.

24. Derber, C. The wilding of America. 2002. New York. Worth Publishers.

25. Dostoevsky, F.M. Notes from underground. 1864/1992. New York: Bantam Books.

26. "US crime study sees society in trouble." 1999. Los Angeles Times. 6 December. Section A p.22

27. Murphy, C. "Are the rich cleaning up?" 2000, Fortune 24 September. P. 252.

28. "Is America the land of the poor?" Investor’s Business Daily 1999, 27 December P. A.1.

29. Freeman, R.B. "Toward an apartheid economy?" Harvard Business Review 1996. Sept-Oct p. 114-121

30. Derber, C. Ibid.

31. Childs, J. Greed. 2000. Minneapolis, Fortress Press. P. 24.

32. Rawls, J. Ibid ,p.33.

33. Bly, R. The sibling society. New York: Vintage Books. 1977.

34. Kuhn, H. and Nasar, S. (Eds) The essential John Nash. Princeton, N.J. Princeton University Press. 2002.

35. Lasch, C. The revolt of the elites and the betrayal of democracy. 1995. New York: Norton.

36. Rose, S.J. Social stratification in the United States. 2000, New York: The New Press.

37. McGuire, C. Social stratification and mobility patterns. American Sociological Review. 1950, v. 15, p.200. A

      historical  study cited by Gabler found that in 1850, 2 per cent of the wealthy of that period had been born poor

      while 90 percent were descended from families of affluence and social position: Neal Gabler, Life: The movie.

      1998.      New York: Vintage Books. p. 30.

38. Attributed to Robert Monks, quoted in H. Scutt, The trouble with capitalism. New York: Zed Books 1998. P. 176

39. Ryan, R.M. and Deci, E.L. On happiness and human potentials: A review of research on hedonic and eudiamonic
       well-being. Annual Review of Psychology. 2001, 52, 141-166

40. Mark Twain is listed as a caricaturist and a satirist but this does not change my point because the very young do

      not know enough to distinguish satire (some adults can’t either).

41. Sagoff, M. "Do we consume too much?" Atlantic Monthly, June 1997, p. 80.

42. Lomborg, B. The skeptical environmentalist. 2001. New York: Cambridge University Press.


Julian Edney
,  “Greed (Part I)”,  post-autistic economics review, issue no. 31, 16 May 2005, article 2,