Is Greed the Engine of Capitalism?

The Financial Times reports on a piece of silliness from the Pope:

Pope Benedict XVI on Tuesday condemned the “grave deviations and failures” of capitalism exposed by the financial crisis and issued a strong call for a “true world political authority” to oversee a return to ethics in the global economy.

One mistake the good Pontiff is making is to confuse capitalism and capitalists.  One who cannot see the difference may fallaciously conclude that the greed of some capitalists is rooted in capitalism.  Here is a post from a while back that counters the notion:

The C-Span Washington Journal of 31 May 2004 with Steve Scully at the helm was particularly excellent.  One of the guests was a sweet old lady by the name of Mary Alice Herbert, the vice presidential candidate of the Socialist Party USA.

She spouted a lot of nonsense, but the assertion that really got my blood up was the claim that, and I quote from my notes, "The engine of capitalism is greed." This is no better than saying that the engine of socialism is envy. Greed (avarice) and envy are vices. A vice is a habit. Habits don't float in the air; they are dispositions of agents. A greedy person is one who is disposed toward inordinate acquisition, while an envious person is one who is disposed to feel diminished by the success or well-being of others to the extent of hating them for their success or well-being. Clearly, one can support, and participate in, a free market economy without being greedy. Anyone who is reading this post is most likely an example. Equally, one can support, and participate in, a socialist economy without being envious. Think of all the good Russians who really believed the Commie nonsense, made their selfless contributions, but ended up in the Gulag anyway. Freda Utley is good on this.

Greed is not what drives a free market economy; indeed, greed is positively harmful to such an economy. Take Enron. The greed of Jeffrey Skilling, Kenneth Lay, et al. led to the collapse of the company and to massive losses for the shareholders. Please don't confuse greed with acquisitiveness. A certain amount of acquistiveness is reasonable and morally acceptable. Greed is inordinate acquisitiveness, where 'inordinate' carries not only a quantitative, but also a normative, connotation: the greedy person's acquisitiveness harms himself and others. Think of the miser, and the hoarder. What's more, greed cannot be measured by one's net worth. Bill Gate's net worth is in the billions. But he is not greedy as far as I can tell: he benefits millions and millions of people with his software, the employment and investment opportunities he provides, and the vast sums he donates to charities.

C-Span viewers who called in to object to Herbert that socialism has failed everywhere it has been tried were met with the standard Marxist response, namely, that capitalist encirclement, capitalist opposition, is responsible for socialism's failure. This is an example of the classic double standard leftists employ. The problems of capitalism are blamed on capitalism, but the problems of socialism are ALSO blamed on capitalism. Another form of the double standard involves the comparison of capitalist reality, not with socialist reality, but with socialist ideality, socialist fiction, socialist utopia. A reality-to-reality comparison issues in an unfavorable judgment on socialism.

Finally, there is a problem with the sort of 'bottom up' or democratic socialism that people like Herbert espouse. This is supposed to avoid the problems attendant upon the sort of 'top down' socialism attempted in the Soviet Union. The latter required a revolutionary vanguard unequal in power to those on whom it sought to impose socialism — in obvious contradiction to the ultimate socialist desideratum of equality. Simply put, if equality is the end, the means cannot be dictatorship by the Party or by one man of steel. No entity, once it gains power, is likely to give it up. This is why Castro still rules his island paradise, forty six years after his 1959 ousting of Battista. The will to power is the will to the preservation and expansion of power.

Therefore, many socialists nowadays call themselves democratic socialists. But this smacks of a contradiction in terms. If socialism is to replace capitalism — as opposed to being confined to isolated pockets of society such as communes — then it must be imposed by force by a central authority. For there are just too many of us who cannot see why material (as opposed to formal) equality is even a value.