Greed Is Not Good, and It’s Not Capitalism

Capitalism doesn’t need greed. What capitalism does need is human creativity and initiative.

After months of hearing the media and pundits pronounce the untimely death of capitalism, it did my heart good to see a recent Newsweek cover story challenge the familiar trope. The author, Fareed Zakaria, noted that this pessimistic pronouncement gets air time in the wake of every financial downturn. But in reality, capitalism, over the long haul, has succeeded far beyond any other economic arrangement in human history. If worldwide communism couldn’t destroy capitalism, why are we so quick to believe that some bad fiscal and government policies in real estate will do it?

Unfortunately, some copy editor entitled the otherwise reasonable article, “The Capitalist Manifesto: Greed Is Good (To a point).” This is one of the worst myths about capitalism. It was immortalized by the character Gordon Gekko in the 1987 movie “Wall Street,” directed by Oliver Stone. Michael Douglas played ruthless corporate raider Gordon Gekko, a charismatic villain who insists that “greed is good.” Gekko was Stone’s scathing embodiment of capitalism, seductive and selfish to the core. And now, thanks to the financial crisis, Stone is working on a sequel.

More unfortunately, this “greed myth” (as I have called it) is often perpetuated, as it was on the cover of Newsweek, by the putative defenders of capitalism. From Ivan Boesky to the bestselling tomes of Ayn Rand, champions of capitalism have told us for decades that greed is good since it’s the great engine of capitalist progress. Even Walter Williams and John Stossel, two of my favorite free marketers, have used this argument in recent years.