In his 1987 movie Wall Street, Oliver Stone tells the story of Gordon Gekko, a stock speculator who will do anything to win. He lies to partners, spies on competitors, and trades on inside information. Gekko defends his greed in a speech inspired by a real speculator of the era, Ivan Boesky.
…Greed, for lack of a better word, is good. Greed is right. Greed works…. Greed, in all of its forms…has marked the upward surge of mankind….
The claim that greed “has marked the upward surge of mankind” finds some support in the work of the pioneering economist Adam Smith. Recent centuries have seen a blossoming of technology. Smith describes how these advances depend on the specialization that markets create.
The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour…. As it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market.1
The role of markets in advancing technology provides some support for claims about the benefits of greed because we generally trade for profit. Smith writes,
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.2
However, thriving markets require more than a desire for profit; thriving markets require trust. When we trade with the public, we face risks like theft and fraud. While we may not rely on the benevolence of the baker for our bread, charity is not the only alternative to trade. Another alternative is predation, and greed undermines trust by encouraging predation.
The book of Proverbs offers an account of prosperity in tension with that of Gekko. Proverbs provides general guidance for navigating life. The path to prosperity it describes runs not through greed, but through love for God and other people.
Let not steadfast love and faithfulness forsake you;
bind them around your neck;
write them on the tablet of your heart.
So you will find favor and good success
in the sight of God and man. (Proverbs 3:3 – 4 ESV)
The attitudes described in Proverbs encourage trade by discouraging predation. If we love God and love other people, we will treat others fairly.
A false balance is an abomination to the Lord,
but a just weight is his delight. (Proverbs 11:1 ESV)
Although Smith describes the role of self interest in trade, he also warns about the danger to markets from greed. In markets that function well, sellers compete with each other, driving down prices. Smith warns that sellers may try to increase profits by colluding to control prices. Smith also describes the need for trust between trading partners.
Commerce and manufactures can seldom flourish long in any state which does not enjoy a regular administration of justice, in which the people do not feel themselves secure in the possession of their property, in which the faith of contracts is not supported by law, and in which the authority of the state is not supposed to be regularly employed in enforcing the payment of debts from all those who are able to pay.3
Although Smith focuses on the role of the state, the law is a limited tool for achieving trust. Law enforcement is costly, and the law cannot address every possible situation. While the law is valuable, a fuller cooperation can be achieved more cheaply though the attitudes described in Proverbs.
Greed motives some to choose predation, but predation is not always profitable. Although thieves usually pay the lowest price, sometimes they pay the highest. Proverbs describes the sudden destruction that may befall those “greedy for unjust gain.”
My son, if sinners entice you,
do not consent.
If they say, “Come with us, let us lie in wait for blood;
let us ambush the innocent without reason…
we shall find all precious goods,
we shall fill our houses with plunder….”
my son, do not walk in the way with them;
hold back your foot from their paths….
For in vain is a net spread
in the sight of any bird,
but these men lie in wait for their own blood;
they set an ambush for their own lives.
Such are the ways of everyone who is greedy for unjust gain;
it takes away the life of its possessors. (Proverbs 1:10 – 19 ESV)
The passage from Proverbs describes robbery, but sudden destruction is not reserved for those who serve their greed through violence. The speech praising greed by Gekko was inspired by a commencement speech Boesky gave at a prestigious business school. Not long after giving that speech, Boesky pleaded guilty to violating securities laws. He was fined $100 million and sentenced to over 3 years in prison.
In Wall Street, Gordon Gekko claims that greed has “marked the upward surge of mankind.” Mankind has seen tremendous technological progress in recent centuries. That progress relied on the specialization that markets create, and we participate in markets for profit. However, markets require trust to thrive, and greed can undermine that trust. Although the upward surge of mankind followed the pull of profit, it was also marked by integrity and good will.
- Adam Smith, Wealth of Nations (Amherst, New York: Prometheus, 1991), 20.
- Smith, Wealth of Nations, 9 – 24.
- Smith, Wealth of Nations, 578.