The Disputable Truth of Economic Greed

When Herb Stein, Chairman of the Council of Economic Advisers under Presidents Nixon and Ford, wrote his celebrated Wall Street Journal article, Adam Smith did not wear an Adam Smith necktie,1 he was expressing an exacerbation with some of the more dogmatic proponents of the free market economy. During the 1980s, Reaganomics in the United States and Thatcherism in the United Kingdom not only celebrated greed and individualism, it told us that it was through greed that the economy worked best. We were told that the state had a limited role and that society (were we to accept its existence) should be somewhat sanguine about inequality.2 Many of the well funded ‘free market’ think tanks which hold the torch for Smith, continue to advocate these ideas in a philosophical sense today.3 This chapter is not an exposition of Adam Smith but it seeks to understand the status of greed (both dogmatically and practically) in an open economic system and assess its usefulness or indeed destructiveness in the modern political economy. It considers what could be meant by Smith’s description of greed, the consequences for economic life of stretching the concept into corporate and consumer behaviour and questions the ability of the state to regulate virtue introducing the concept of a regulatory super-cycle.