24 March 2021

With his ‘greed’ joke, Boris has resurrected a classic anti-capitalist myth

By Eamonn Butler

It was a weak joke, delivered to (supposed) friends, instantly regretted and best forgotten.

But Boris Johnson’s equation of capitalism with greed is a common mistake on both sides. The caricature Wall Street financier Gordon Gekko proclaims that “Greed is good!” while Marx rejects the “werewolf greed” of capitalists. Indeed, people often define capitalism in terms of greed, concluding that no social good can result from such a base motive.

The Prime Minister’s comments resurrect this idea, all too well. By applying the common anti-capitalist trope, that greed drives companies, to what has been an act of national collaboration, pride, and selflessness on behalf of many, Boris shoots the capitalist cause in the foot. It is a fatal error: suggesting that corporations are pitted against people, when in fact they exist only to serve them.

In reality, capitalism is motivated by rational self-interest, not greed. Greed is acting on one’s own interests, accumulating things regardless of one’s needs, without a care for the interests of others, and with contempt for social conventions, even laws.

Self-interest, by contrast, is a natural human characteristic, without which none of us would survive. It prompts us to act in ways that fulfil our needs; but more often than not, that rational, long-term self-interest requires us to collaborate with and help others.

Through capitalism, fortunately, we have found a way to steer self-interest into producing a positive and productive society, rather than a chaos of self-serving individualists. In commerce, the only way to prosper is to provide others with what they want. Far from disregarding the interests of others, capitalism makes us keen to understand the needs of others and to serve them.

Much of that is down to the profit motive — self-interest again. Every time a business or entrepreneur takes a chance, whether that’s creating a new technology, trading stocks and shares, buying out a failing competitor, or (in normal times, at least) developing a new medicine, they do so with the hope of a return on their risk and investment. “Regard to their own self-interest”, as Adam Smith put it, is the perfect way of generating cooperation between different individuals and spreading that benefit throughout society. Companies invest resources to create what customers want, in the course of which they create jobs and pay wages, raise living standards, drive progress, boost consumer choice, and generate funds for public services.

Greed is self-centred, but capitalism is cooperative. In fact, capitalism punishes greed. Yes, you might be able to make one ‘quick buck’, but you won’t make two. People simply don’t deal with producers they believe dishonest, untrustworthy or greedy. Thanks to competition, they shop elsewhere, and tell their friends to do the same. That is why we don’t need ‘anti-greed’ laws to stop cafes, hairdressers or grocers from overcharging us.

We all benefit from collaboration through honest trade; and we all want to live in a world where people deal fairly. Self-interest means people pursuing their own aims, vision, purposes and ambitions, not those imposed on them by others. They pursue those dreams not just for their individual benefit but for the benefit of their families and others whom they love and care about. They collaborate with others to achieve this, benefiting both sides. But while the underlying driver might be self-interest, that does not imply some undesirable social result.

On the contrary, collaboration through trade produces a social outcome that is generally beneficial. If you doubt that, look at the purposes that really motivate individuals under capitalism or socialism, and trace what good or bad social outcomes those systems really produce.

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Eamonn Butler is Director of the Adam Smith Institute and author of An Introduction to Capitalism.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.