This is the question answered in chapter 5 of Jay Richards’s Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem.
In the movie Wall Street, character Gordon Gekko famously states, “greed is good.” This is what many (wrongly) believe is the essence of capitalism. In 1714 Bernard de Mandeville published “The Fable of the Bees: Private Vices and Public Virtues,” arguing that British society looked virtuous on the outside but was corrupt and vicious on the inside. He wrongly argued that evil vices produced good results, but he rightly saw the law of unintended consequences: Good intentions don’t always yield good results, and bad intentions don’t always yield bad results. Some things can be “bad for the soul but good for society.” For example, when Bernie Marcus and Arthur Blank were fired from Handy Dan Home Improvement in 1978, they wanted revenge on their employer, so they opened Home Depot, which now employs hundreds of thousands of people and offers low priced products, which help society. Their bad intentions resulted in good for people.
Selfishness, of course, is not a virtue, but self-interest is not bad. We breathe, wash our hands, eat fiber, take vitamins, clock in at work, look both ways before crossing the street, and even pray to God for forgiveness out of self-interest, and we should do all these things! Adam Smith spoke of self-interest, not selfishness. Ayn Rand, on the other hand, praised greed and selfishness in her books, but she was reacting against her homeland’s (what would become the Soviet Union) communist ideology. She saw altruism (looking out for others) as a vice, but she was wrong. We all know virtuous people who are selfless, and we rightly admire their selflessness. Perhaps Rand’s version of capitalism – endorsed by proponents, condemned by critics – is so common because other voices for capitalism don’t exist. They should.
The capitalist, the entrepreneur, the free-market investor and creator of goods and services, often has virtues beyond those of the normal person:
- He sets aside rather than consumes his wealth
- He anticipates the needs of others
- He risks rather than hoards
- He has faith in his neighbors
- He makes disciplined choices
- He discovers new ways to combine resources to meet others’ needs.
And even if the capitalist is not virtuous, even if he’s selfish, he has to act as if he has your interests at heart if he wants you to buy something from him. He can’t sell you rotten meat and make a profit. He has to give you what you want or need at a price that’s better than you can get from someone else. He’s forced to act in your interest, whether he likes it or not.
As we always say, of course, none of this works as well as it could without the rule of law and private property rights. Paper and coin money is also extremely useful for a free market. Money is a “stand-in” for stuff, and it involves trust and faith that others in society will agree that it’s worth something, and that they’ll pay up with goods or services when you deliver the note. This way we don’t have to “barter.” Such a system opens up trade around the world, helps lift entire societies out of poverty, and gives people the best products at the lowest prices. Not a bad deal.
One final question: If capitalism is not based on greed, doesn’t it still make people greedy? The evidence actually shows otherwise. The U.S., for example, is one of the top four economically freest countries in the world, yet it gives the very most in terms of charity – more than twice (per GDP) the next largest giver. Our capitalistic culture hasn’t resulted in more greed and hoarding but less. We are the most generous country on earth. Of course, Christians should be even more generous and self-sacrificing, but that’s a human nature problem, not an economics problem. We are sinful, vicious people no matter what system we’re under. We need a Savior and His Holy Spirit to change our hearts.