The Vice of Selfishness

I have not done grain-profiteering.

The "Negative Confession" or Protestation of Ani, The Egyptian Book of the Dead, The Book of Going Forth by Day, The Complete Papyrus of Ani, Featuring Integrated Text and Full-Color Images, translated by Dr. Raymond O. Faulkner [1994, 1998, Chronicle Books, San Francisco, 2008, Chapter 125, Plate 31], hieroglyphic transcription, E.A. Wallis Budge, The Egyptian Book of the Dead, The Papyrus of Ani [1895, Dover Publications, 1967, pp.199-200] -- the fifteenth Confession as translated (in both references), but the 28th in the order of the manuscript.


, .

The superior man understands what is right;
the mean man understands profit.

Confucius, the Analects IV:16


If a man thinks only of his own profit, and tries to benefit himself at the expense of others, he will incur the hatred of Heaven.

"The Battle of the Ape and the Crab," Tales of Old Japan, Algernon Bertram Freeman-Mitford [1871, 1910, Ægypan Press, 2010, p.157]


Communism was a gigantic façade, and the reality concealed behind it was the sheer drive for power, for total power as an end in itself. The rest was merely instrumental -- a matter of tactics and some necessary self-restrictions to achieve the desired end. But the façade was more than mere decoration:  it was communism's only means of survival; its respiratory system. It was also the ineradicable residue of the tradition of the Enlightenment and nineteenth-century socialism, of which communism was indeed a deformed descendant. As with all descendants, however deformed, some inherited traits are always visible, and in communism, too, these were evident. The rationalism, contempt for tradition, and hatred for the mythological layer of culture to which the Enlightenment gave birth developed, under communism, into the brutal persecution of religion, but also into the principle (practiced rather than directly expressed) that human beings are expendable: that individual lives count only as instruments of the 'greater whole' or the 'higher cause,' i.e. the state, for no rational grounds exist for attributing to them any special, non-instrumental status. Thus rationalism was transformed under communism into the idea of slavery. And romantic and early socialist strains -- the search for lost community and human solidarity, the protest against social disintegration caused by the industrial revolution and urbanization -- developed, under communism, into caricature:  solidarity imposed by force, in an attempt to create a fake, merely ostensible unity -- the unity of despotism.

Leszek Koakowski (1927-2009), "Communism as a Cultural Force," Is God Happy? Selected Essays [Basic Books, 2013, pp.36-37]


My contention is, then, that these criticisms of the self-interested character of modern Europeans are precisely the opposite of the truth. "Naked self-interest" will often be found in traditional societies; it will be found everywhere, in fact, but in Europe it has been to some extent domesticated by our remarkable repertoire of "moralities."

Individualism thus lay at root of the Western institution of civil society, and it is in the highest degree significant that the primary ambition of all ideological movements was to destroy that area of autonomous self-creation in order to centralize all enterprise in the mands of a masterful state. Only that way could social perfection even be imagined.

Kenneth Minogue, The Servile Mind, How Democracy Erodes the Moral Life [Encounter Books, 2010, p.301]


There's an inceasing sense in our political life that in both parties politicians call themselves public servants but act like bosses who think that voters work for them. Physicians who routinely help the needy and the uninsured do not call themselves servants. They get to be called the 1%. Politicians who jerk around doctors, nurses and health systems call themselves servants, when of course they look more like little kings and queens instructing the grudging peasants in how to arrange their affairs.

Peggy Noonan, "Our Selfish 'Public Servants'," The Wall Street Journal, Saturday/Sunday, January 18-19, 2014, A13

In 1964, Ayn Rand published a book of essays entitled The Virtue of Selfishness. These were principally efforts to formulate and defend the moral foundations of capitalism. However, "selfishness" is traditionally regarded as a vice, not a virtue. Since Rand is not a very ironic person, we can't really see her choice of words as ironic. Instead, Rand's rhetoric is seriously meant and tends to give people a bad impression about her ideas and a false impression about capitalism. Similarly, the 1987 movie Wall Street features actor Michael Douglas, playing the unpleasant and villainous businessman, Gordon Gekko, lecturing that "Greed is good." The director of Wall Street, Oliver Stone, despite his own considerable success in a capitalistic industry, nevertheless is a partisan of the Left who is hostile to finance and disparaging of business (even as he has recently been recycling stale Soviet propaganda that Harry Truman, rather than Josef Stalin, was responsible for the Cold War). Saying that "greed is good," where greed (or avarice, Latin avaritia) is one of the Seven Deadly Sins, is thus implicitly a moral condemnation, and is meant to be, of capitalism. Like Rand, defenders of capitalism sometimes perversely embrace this rhetoric and seek interpretations under which "greed" will indeed be a good. John Stossel has built whole shows around positive arguments that "greed is good." This is not a good idea. It is both morally confused and rhetorically self-destructive. Questions that arise about Rand's ethics in particular are discussed elsewhere. Here, I wish to consider in general the issue of self-interest and "greed" in relation to business and capitalism. The truth is that capitalism is not just, as Adam Smith said, the "natural system of Liberty," but it is essentially a system of morality and of moral values. This must be hammered home.

While Rand may have intended to shock and challenge traditional views of ethics, I am not sure she ever acknowledged that there was already a virtue of self-interest in traditional ethics. That was prudence -- a word that was popular as a name for women in English in the Middle Ages (Latin Prudentia) and then even more so among English Protestants, but also for men, as Prudencio (Latin Prudentius) in Spanish and Portuguese, Prudenzio in Italian. "Selfish," in turn, is characterized by Webster's as "concerned excessively or exclusively with oneself: seeking or concentrating on one's own advantage, pleasure, or well-being without regard for others." Indeed, a concern exclusively with oneself, without regard for others, is likely to result in moral wrongs. "Excessive" attention to one's own self-interest, however, calls for clarification, unless, as we sometimes see, critics of capitalism do not want to allow that people should have any concern for their self-interest. Unless they wish to advocate monasticism and ascetic poverty (or a communist slave state -- but wait a minute...), ideals that their own lifestyles and secular expectations generally contradict, the critics are bound to make clear, which they often do not, what is legitimate and what is excessive self-interest.

Before proceeding, however, something must be kept in mind. Since anti-capitalists believe that they have the moral high ground in the debate, and Republican politicians, in particular, have difficulty articulating what is wrong with that, it is something that should be addressed first. Recently (August 2012), retiring Congressman Barney Frank, referring to the enthusiasm of Republican politicians like Paul Ryan for Ayn Rand, said that "These are right wingers who have this philosophy, going back to Ayn Rand, that says we should not come together to do things for the common good." This is a favorite trope of the Left and is a reflex of their intense and indignant moral self-righteousness (founded paradoxically on the philosophical nihilism of deconstruction and "post-modernism"). But what really bothers them about "right wingers" is not that they never "come together" for the common good, because they do, but it is the libertarian principle that associations for the common good can and should be voluntary. The Leftist idea is that the "common good" is the government passing laws that make people do what people like Barney Frank think is for the common good. Behind the "common good" in those terms are men with guns, i.e. the police, who will show up when anyone doesn't want to get with the program. In short, the political ideal of Barney Frank (perhaps also what Barack Obama meant by "collective action" in his Second Inaugural Address) is a police state, the military, or a prison, which is what we should suspect from their desire to disarm the citizenry in the name of "gun control." They may not realize the paradox of their goals every time they express shock, shock at examples of the police using excessive force. They seem to be confused; yet their idea of doing "good" for the voters is taking away their freedom, which is the very thing likely to provoke disobedience or even resistance. The law in its sublime majesty and benevolence then sends in the SWAT team. This is what politicians like Barney Frank are all about, and I have never heard any of them complaining that things are getting out of hand when the National Forest Service has its own SWAT team. The iron fist in the velvet glove -- and a rhetoric that excoriates the rich even while the citizen becomes a peon and thrall of government and the political elite. That is their "common good."

The imagery, which the Left likes to reproduce in its political demonstrations, is "the people" marching arm in arm in vast, ordered ranks -- a veritable legion of "solidarity" and strength [note]. The confidence of the people in such demonstrations in their own virtue and righteousness is palpable. That this is all a display of military forms, among people who otherwise may have nothing but contempt for the military, is lost on them. And the fact that it is falsified by the existence of all the people who disagree with them, and have not joined the demonstration, is ignored. Indeed, one of the frequently heard objections to capitalism on the Left is that it produces "winners and losers." This is true. But the winners and losers in the market are the businesses and the producers, who win by providing popular products and services (or, unfortunately, getting the government to subsidize and protect them). Losing businesses are the ones that go out of business. And it is a rare day when a Leftist expresses any sympathy for a bankrupt business, except for the workers who lose their jobs (they should all be employed by the government, anyway).

On the other hand, politics generates "winners and losers" among the whole population, producers and consumers, where the winners are then able to use all the powers of the state, of law, force, and the courts, against the losers. The losers may be in peril of their property, liberty, and even their lives. The marches of popular "solidarity" completely ignore this; and if reminded that there are people who disagree with them, and may have lost an election or otherwise been deprived of political power, it is remarkable how intense the fury, contempt, and abuse may be that is expressed against such people. They are "losers," not just as an electoral minority, but morally as well. The sense there, of course, is that political opponents are so debased and contemptible as to be sub-human. They are not part of the solidarity demonstrations because they are simply not of "the people" and so are unworthy of any human consideration. When sometimes forced to face the fact that a genuine majority of the people may be against them, the Leftist political elite can defend its self-image, and self-righteousness, with the Marxist principle that that majority has been deceived into "false consciousness" and do not know their own best interest. This is especially noteworthy when it comes to female conservatives like Sarah Palin, black conservatives like Herman Cain, or Hispanic conservatives like Marco Rubio. These people make the Left just crazy. All of the misogynistic and racist rhetoric for which Leftists otherwise tend to think that people should be jailed for using is instead used without hesitation or apology against Palin, etc. It is not just that they are vicious conservatives and Tea Party favorites (which puts the fury into hyperdrive), it is that they are traitors, since "true" women, blacks, and Hispanics, of course, are all in solidarity with the Left. Traitors are even worse than the possibly clueless masses. The Leninist "vanguard of the revolution" will look after the masses, but the traitors need to be destroyed. There is in fact no moral high ground in these sentiments.

Similarly, the political rhetoric in which capitalism is smeared as "greed" and "selfishness" generally originates, often cynically, in people who are themselves consumed by the vice of envy, and whose actions and recommendations betray the hearts of thieves -- if not also tyrants. There is no moral high ground there, especially in politicians or activists who are able to live off the labor and industry of others, either against their will (through taxation), or by playing off "liberal guilt" on the part of those who are ill at ease with their own economic success.

In 2012, President Obama decided to run for reelection, successfully, by demonizing "the rich" and claiming that they are not paying their "fair share" of taxes, which are needed to cover the deficits of necessary and beneficial social spending (i.e. buying votes) by the government. Blaming the "rich," however, has little to do with the poor growth and high unemployment of the present economy, whose problems seem to be dismissed by a President who has said, seriously, that "The private sector is doing fine" [8 June 2012]. It is just more government that is needed and necessary. Since high income earners already pay the lion's share of taxes, and half of wage earners already pay no income tax at all, it is not clear what a "fair share" is supposed to be; and neither Obama nor other Democrats were specifying any actual rate that would qualify as "fair." Although Michael Moore has said that, "The money is out there," even if "the rich" paid all their income in taxes, or more (which Sweden once tried), this still would not cover the vastly expanded spending that was initiated by the Democrats in 2009, even after complaints that the earlier Republican Congresses, before 2006, had been spending excessively. Also, raising taxes on high income individuals pulls in many small businesses which file individually rather than as corporations. Since most jobs are created in small businesses, which typically operate at the margins of profitability, a tax increase there is really another body blow at the private economy.

But it is all worse than that. Attacking "the rich" in the middle of economic stagnation, after Obama himself had earlier said himself that tax increases in the middle of economic difficulties would be a bad idea, reveals the sophistry of the whole rhetorical exercise and the underlying cluelessness and/or hostility towards capital of the ideology of the Democratic Party. At one level, this may just be ignorance of Say's Law and a sophisticated, if wrong-headed, promotion of Keynesian economics, but it may also be a reflection of the Marxism that has been bombarding students in the American "educational" system, creating activists and politicians with no understanding of economics. Since Marxism in practice has generated nothing but poverty, tyranny, and slaughter, politicians using such rhetoric and ideas are clearly more comfortable with their own virtue and brilliance than with what actually generates a broad base of wealth for "the people." But it is even worse than that. The Marxism taught in universities usually does not even come from competent Marxists, but from English Department professors or Sociologists with a dumbed-down version of Cargo Cult economics that is not even as sophisticated as proper Marxism.

The vagueness of the rhetoric of "fair share" is matched by the semantic vagueness of terms like "greed," whose Webster dictionary definition can do no better than "excessive or reprehensible acquisitiveness." Similarly, for "avarice" we get, "excessive or insatiable desire for wealth or gain." What is "excessive"? Well, since President Obama himself has said, "I do think at a certain point you've made enough money" [29 April 2010], this must depend on the idea that there is such a thing as "enough money." So what is enough? The problem there is that, for practical purposes, there is no such thing as enough (or too much) capital, since larger concentrations of capital merely make possible larger investments in larger projects. A friend of mine once said that the exploration of space has not progressed as far as we expected it would in the 50's or 60's because, "capitalism has not produced enough wealth." This was a strange thing to say, (1) because it implies that something else (socialism?) might produce more wealth (fat chance), and (2) because there has been much effort, politically, to prevent large accumulations of private capital, which are regarded as a threat, both to the "working man" and to the politicians who do not want rival centers of power in the nation. Once again, we see ignorance or a self-interested hostility to capital.

The image we get of "greed" is of Scrooge McDuck playing on a pile of coins, probably gold coins. However, coin hoards as a real part of economic life are long gone. If you want a good income from the wealth that you have acquired, you need investments. Just putting it in the bank will not provide much of a return, but it will pay something. Either way, the capital is being put to use, either by the investor, his investment advisors, or by the bank. If Scooge McDuck had his pile of coins and then wanted to live well, he would need to spend it. Before long, it would be gone. There have been rich people like that. The Vanderbilt family squandered their legendary wealth. The original "Robber Barons," who made their own money in the first place, like Cornelius Vanderbilt or John D. Rockefeller, tended to live simply, abstemiously, and even ascetically. It is the later generations, just as Ibn Khaldûn himself could have predicted, who indulge in all the conspicuous consumption, do not know how to make money, or even keep it, and who reduce themselves to modest circumstances. While Cornelius Vanderbilt had not even built a mansion, Cornelius III kicked his son, Cornelius IV, out of the house (i.e. the 5th Avenue mansion) because he got an actual job. This was a case of moral decay, just as described by Plato, but was also self-correcting. Subsequent Vanderbilts, although sometimes wealthy, have mostly had to work for a living. On the other hand, the Kennedies are secured by trust funds that are managed beyond their control. This leaves them free to enter politics and attack capital and entrepreneurs. Living the life of a comfortable parasite, destroying the futures of others, may not exactly be "greed," but there is nothing morally laudable about it.

An industrialist or entrepreneur may act from different motivations. Greed, for all we know, may be part of it. Such a thing would be morally reprehensible, but this still does not mean that the actions of the person are wrongful or their effects deleterious. As I have examined elsewhere, it is better to do good from bad motives than to do evil from good motives. This real issue, then, is whether the accumulation of capital is good or not, and what the motivation of an industrialist like John D. Rockefeller was. With Rockefeller, there is no doubt that his consciousness was that of a classic Protestant work ethic. This was someone who began his working life by making 50¢ a day, which was not at all unusual in the era. With many such men, as they age and run out of ideas, they are no longer creating products, businesses, and industries the way they once did. At that point, we may have some who just indulge themselves, but more typical is what Rockefeller, or for that matter Bill Gates, did, which was to begin giving away money. John D. Rockefeller gave away more money than anyone had previously possessed. This does not always turn out well. Henry Ford endowed the Ford Foundation, which subsequently was taken over by Leftists and now promotes Leftist and anti-American causes. Rockefeller and Andrew Carnegie endowed universities and poured money into education, certainly not realizing that academic culture in the 20th century would become anti-capitalist, anti-American, and now constitute centers for the suppression of free speech. Others, like Gates or George Lucas (who just sold LucasFilms to Disney for $4 billion), know that they want to promote "liberal" causes, which will prevent persons like themselves from being as successful in the future.

A lot of what anti-capitalists call "greed" are just business practices that are proper, prudent, and unavoidable. Thus, employers are often smeared for not paying high enough wages. They don't pay enough simply out of their "greed." However, the wages that a businessmen must pay usually has nothing to do with what they want to pay. The labor market, with the dynamic of supply and demand, determines the level of wages. Extremely successful businesses may have enough profit margin to pay above market wages, as Henry Ford did. But most businesses do not have that luxury. They must hold down labor costs as much as possible or they will be put into bankruptcy. It happens to a lot of them anyway [note]. Or a businessman may be willing to tolerate workers who are less qualified in order to hold down costs. He can pay less for them that way, with the drawback that what they can contribute to the business will be less valuable. There are businessmen who calculate in that fashion, but their business is liable to work less well than if they were willing to pay more and get better workers.

I have considered elsewhere why the level of wages does not determine the level of wealth; but it is important to recollect the point here. As the labor market determines the level of wages, wealth depends on the volume, quality, and efficiency of production. All of these are a function of the capital intensity of production. Increased capitalization allows increases in volume, quality, and productivity which in turn allows prices to be cut. Selling to a mass market, the vendor knows that prices must be cut until the product can be sold to the target consumers. By cutting the cost of kerosene and then gasoline to pennies, John D. Rockefeller made it possible for pretty much just anyone to light their homes (before electricity) or fuel their cars, the cars that Henry Ford provided for no more than $300 by 1920. Since $300 for a Model T Ford would be $3600 in 2011 prices, for which no new car of reasonable quality is now available, it is clear that something has now prevented the efficiency and cost cutting that enabled Ford to make and sell his cars. And since Ford paid his workers better than any other wage earners in the economy (or the world), he clearly had not been doing that at the expense of his workers (except for things like complaints at the speed of the assembly line).

The press loves stories where the greed of capitalists endangers the safety of workings. Certainly there are individuals who have been negligent of workers' safety, but industrial danger and accidents are not always because of negligence, carelessness, or callousness; and that is not always recognized in condemnations of businessmen, business, or capitalism in this respect. First of all, as I have considered in detail elsewhere, much of industry and construction is inherently dangerous, with injuries and even deaths likely whatever are the precautions taken, tolls that sometimes include more than just workers, as in the case of the 1869 death of John Augustus Roebling, the architect of the Brooklyn Bridge. Also, since safety and the new technology that may be needed for it cost money, the workers themselves may be willing to risk more danger for the sake of higher wages -- it is a question of the mix of compensation where the cost of workers to the employer remains constant but distribution of the compensation between wages, benefits, and other costs, like safety, may be adjusted. Today, when employers must cover the costs of workers' compensation insurance, Social Security, Medicare, liability insurance, and other expenses of which workers may even be unaware, wages alone, even with some obvious benefits, like health insurance, may represent only a fraction of the actual cost of a worker to an employer. What the mix is here really doesn't matter to an employer, as long as the total cost of the employee is clear and its burden viable for the survival of the business.

In terms of workers' safety, economists have recognized the "moral hazard" of provisions such as workers' compensation insurance, after the introduction of which industrial accidents actually went up. After all, if you know you are protected from the consequences of accidents, you may be less careful conducting yourself in dangerous circumstances. This dynamic was manifest during the voyage of the Great White Fleet around the world in 1907-1909, when engineering accidents went down during the voyage, since everyone was aware that they were a long way from shore based hospitals, which could not be reached by air in that era (although there was a hospital ship with the fleet). It has been suggested that the human mind is governed by "risk homeostasis," which means that individuals are willing to endure certain levels of risk, and to the extent that their protection from danger increases, they are willing to endure or engage in behaviors that return the level of risk to the preferred state. Thus, as cars get safer, people may drive faster or more recklessly. Nevertheless, as technology improves, accidents or accident rates in industry and transportation have steadily declined, and were doing so before the introduction of (extra-constitutional) agencies like the Occupational Safety and Health Administration (OSHA).

A kind of case that is of interest would be where an industrialist cuts corners on safety because he does not want to reduce wages, or cannot because of union contracts, but must reduce costs to avoid the collapse of the business. Such a person may be essentially self-interested, but facing the ruin of one's life's work does not seem to involve "greed" in the sense usually portrayed, as of someone already successful simply and gratuitously wanting more success. Also, the businessman faced with ruin may genuinely fear for the loss that will be suffered by the "stake-holders" of his business, namely his employees, stockholders, suppliers, and anyone else who relies on the business for their livelihood. Those dependent on the business may be grateful if the measures taken preserve their livelihood; but the failure of dangerous economies, leaving the businessman in a morally false and culpable position, nevertheless has more the look of tragedy than of "greed."

Thus, the problems of self-interest or selfishness in business are no different from those of morality in general. "Business ethics" may address questions that arise in situations that are unique to business, but the principles of their resolution must be those common to all ethical questions. The real problem, and the reason why essays like this must be written, is when things that are essential, unavoidable, and salutary in business are smeared by critics of capitalism, who are often judging by imaginary and utopian standards, of socialism or worse, that have actually never been applied in reality or that have always failed, often with great loss of life, when applied. Thus, in the demonology of the Left, Walmart seems to draw a great deal more fury than the deliberate Terror Famine by which Joseph Stalin, in collectivizing agriculture and stamping out "kulaks," or prosperous peasants, killed up to six million Ukrainians. But perhaps that is of a piece with the similar imbalance between condemnation of Joe Stalin, who murdered millions, and Joe McCarthy, who simply wanted to know if there were Communist agents in the State Department.

The study here therefore branches out, first of all into basic principles of morality, second into the principles of property and contract in capitalism. In none of these is selfishness or greed a virtue, but they also must expose the false morality, the covetousness, greed, and envy of the most resolute and militant critics of capitalism, who have applied terms like "greed" to entrepreneurs, industrialists, financiers, and corporations in the first place.

The top of this page has an epigraph in Egyptian, from the famous and evocative Book of the Dead -- the original Handbook for the Recently Deceased, which guided souls into the Egyptian Afterlife. The line is translated by Raymond O. Faulkner, in the cited work, as, "I have not done grain-profiteering." This is a curious translation. E.A. Wallis Budge, in the cited work, only rendered it as "not have I acted deceitfully." The main verb in this form does not appear in either of the good glossaries of Egyptian that I have, in Sir Alan Gardiner's Egyptian Grammar [Oxford University Press, 1927, 1964] and James P. Allen's Middle Egyptian, An Introduction to the Language and Culture of Hieroglyphs [Cambridge, Second Edition, 2010]. Gardiner has a verb, , with all the right consonsants (where consonants are the semantic core in Hamito-Semitic languages), which he defines as "be greedy, covetous" [p.582]. This is closer to Faulkner than to Budge, but without the specificity. Allen does not have this verb at all. Both Gardiner and Allen, however, have a noun, with more of the glyphs used in the quote, . Gardiner defines this as "vessel" (as we see in the final determinative), in the plural as "chattels, belongings" [p.581], and Allen defines it as "property" [p.465]. While "greedy" or "covetous" suggests profiteering, it is not clear how any of the definitions cited, including the suggestively similar noun, would lead to "grain-profiteering."

Be that as it may, "profiteering" is clearly thought of as a wrongful action, arguably motivated by greed. We often see it in the term "war profiteering," when companies make excessive profits off of providing war matériel (usually as matters of political corruption and rent-seeking), but the Webster's definition adds, "esp. on the sale of essential goods during times of emergency." The latter is what is usually called "price gouging," and it is an issue recently arisen in relation to the devastating hurricane Sandy in 2012. Both New York and New Jersey have laws against "price gouging," and Governors Cuomo and Christie, respectively, made harsh public statements about the practice. However, as in all questions about prices and profits, what is to be "excessive"? The New Jersey law specifies prices more than 10% higher than before the emergency.

But if prices are properly determined by supply and demand, how can a cap of 10% be imposed without distorting the market in the ways that all price-fixing does? Price-fixing, by invariably putting prices too high or too low, produces the attendant phenomena of over- or under-supply (the glut or shortage/absence of goods). It is not uncommon for merchants to sell goods during an emergency at twice or more their previous price. The demand has certainly gone up, and the ability of the merchant to replace his stock may be compromised by damage to the transportation infrastructure or to the premises of his actual wholesalers. Unless prices go up, goods will sell so quickly that in short order none will be left, and the merchant, for the time being, will have nothing to sell. Some argue, including news commentator Bill O'Reilly, that this is good, because otherwise the poor may be unable to afford the goods at all. However, if bare shelves are what is desired, then the poor will be no better off than otherwise. And if someone like Mr. O'Reilly is concerned that rising prices will price out the poor, nothing will stop him from buying goods at the higher prices and then distributing them to the poor, if that's what he wants to do.

Meanwhile, the prices will perform their proper function, which is to send signals about supply and demand. Without "price gouging" laws and threats, every volunteer, Good Samaritan, and opportunist within range of the emergency will load up on needed items and race down to provide them and maybe do good, or make a killing. Such people may be acting out of "greed," or simply out of an understanding that a service needs to be performed for which they reasonably desire commensurate compensation. They may not be able do it for free (as perhaps Bill O'Reilly could) any more than anyone else who needs to make a living. With many such persons arriving on the scene, the abundance of supply drives prices back down to their pre-emergency level. Otherwise, far fewer persons will be motivated to make extraordinary efforts to increase supply. Indeed, the merchant on the scene, who does not raise his prices, and who sees his stock of goods vanish quickly, may not be able to restock without paying high premiums in shipping that would be in effect whether there is an emergency or not. If he passes along these premiums, as he must, he may still be arrested for "price gouging."

The result of demonizing and criminalizing high prices, as someone like Mr. O'Reilly should understand, is there will be goods for no one, not just the poor, and scarcity will persist much longer than it would otherwise. Since a black market always arises under such circumstances, the poor would also be faced with nothing but high prices anyway, which in such a market are even higher than otherwise, since black marketeers (as with drug dealers) will figure in an extra cost for the risk they run of being arrested. This doesn't do anyone any good; but it is typical of the superficial moralistic thinking that generally accompanies public discourse about economics.

The problem of a merchant replacing a stock of suddenly scarcer goods answers an older, notorious question in political economy. After the Arab oil boycott that followed the 1973 Yom Kippur War, oil prices spiked on the international market. American oil companies immediately raised the price of retail gasoline. The political howls about this filled the airwaves. What right did oil companies have to charge more for gasoline, which was made from oil that the companies had bought at pre-boycott prices? The price should reflect what it had cost the companies to acquire the oil. Otherwise it is "profiteering" or "price gouging." This argument, uncontradicted as far as I could tell in public discourse, was so persuasive that Congress, under President Carter, quickly passed a "windfall profits tax," to deprive the oil companies of their ill gotten gains from the happenstance of rising oil prices. Clearly, they didn't deserve to have that money. For good measure, gasoline prices were then fixed in an extension of the wage and price controls that Presidents Nixon and Ford had used to (absurdly) "combat" inflation. Again, as with all price fixing, this resulted in shortages of gasoline, which meant that people often needed to wait in lines for gasoline, sometimes for hours, wasting gas as engines idled or started and stopped.

Why the argument for a "windfall profits tax" was false, malicious, and destructive was something that I did not hear explained for years. But the principle is simplicity itself. A merchant must sell goods, not at the price he paid for them, but at the price it will cost to replace the inventory. Otherwise, he will be left short of money to replace his stock and will be unable to do so. This principle is surely known to everyone in business who is faced with the problem of staying in business, but in the 1970's it curiously never made its way onto the Network News, that I ever noticed, or into the mouth of any Congressman, whose job ought to be to alert people to the presence of foolish and irresponsible legislation. Indeed, I have still never heard it from such sources -- which must therefore be stunningly ignorant, cowardly, or viciously hostile to capitalism. I expect that it is all three.

Is there a point where the process of market prices ought to be suspended? Well, yes. I have considered elsewhere the case of the person dying of starvation and thirst emerging from the desert. He might be willing to sell himself into slavery to obtain food and drink, without which, of course, he would die anyway and be worse off than as a slave. We could say that someone willing to provide food and drink, at the cost of another's freedom, is, after a fashion, only responding to the forces of supply and demand. The demand is very great, and he possesses, within a severe and critical time frame, the whole of the supply.

In the first place, in such a situation of necessity (jus necessitatis), the dying person has the right to take what he needs by force. If he is physically unable to apply such force, or scruples to do so, then he may innocently, albeit fraudulently, agree to sell his freedom, a contract which, having been concluded under duress, is legally and morally unenforceable. Under Roman law, indeed, selling oneself into slavery was not unusual. Having now concluded, for reasons of humanity and other considerations (i.e. the morally and economically destructive effects of the institution), that slavery ought not be allowed, no such terms could be imposed on a vulnerable victim. Of course, if the person in possession of food and drink literally has mortal need of them for himself (in the desert), he is under no obligation to help the dying person at all, although he may share his supplies out of humanity, endangering them both equally. But what if he merely asks exorbitant prices? Say, thousands or tens of thousands of dollars, which might put the victim in debt for life?

Since humanity requires that the dying person be helped, if possible, and the person may innocently use force to obtain this help, the provider has no ground to demand any compensation, let alone an exorbitant one. Just as with a contract for slavery, life giving aid at the cost of thousands of dollars would be both morally and legally unconscionable, and so unenforceable. But if humanity compels the provider to provide, it also compels the victim to compensate the provider, when that becomes possible. The cheerful and undemanding provider, indeed, is owed more, and the properly grateful victim typically will understand that a reward, and not bare recompense, is owed, even if nothing of the sort is demanded. Indeed, as in political entitlements, beneficiaries become less grateful to the extent that they believe they have a right to certain benefits -- and where necessity is involved, they would be correct about the right, if still wrong about the gratitude. The grudging, reluctant, or unwilling provider to the starving and thirsty is proportionately owed less, or no, reward.

In regard to economics, the Left supposes that, since everyone needs a livelihood, the individual who does not provide it, or imposes conditions that the employee doesn't like, is in the position of the person who denies aid to the starving and thirsty. This is, of course, why Jefferson liked the idea of everyone being an independent yeoman and owing their livelihood to no one. But even without that, no individual in a free market owes anyone a job or a living, let alone under just the conditions that an employee would prefer. This is because, (1) anyone can move on to a different employer, (2) anyone can actually go into business for themselves, achieving something like the autonomy that Jefferson wanted for his yeomen, and (3) an employer is only in that position by virtue of running a business, which he will lose with his employer status if he is unable to exercise such economies and efficiencies as to allow him to avoid bankruptcy. As we have seen, some representatives of "the workers" are perfectly willing to sink a business, along with the jobs of the employees, if conditions are not up to their demands.

Fulfilling any of these conditions has now become difficult because of government interference in business and the market. (1) Things like the minimum wage, labor law, workers compensation insurance, and multiple other protections for workers make it increasing expensive and troublesome to hire anyone. These measures produce the very scarcity of employment that supposedly motivates them in the first place. The results are obvious in both France and California (at least), where unemployment is over 10%, with little prospect of improvement. France, the darling of American (or anti-American) Europhiles, having elected a new Socialist President, now (12/2012) has its highest unemployment in 14 years; and it has added the additional disability to employers (common in Europe) of either being unable to fire employees merely for economic (or perhaps any) reasons or owing them two years of wages if they do. If you can't fire people you don't need, or who are bad workers, you are going to be extremely reluctant to hire anyone in the first place, especially the untested young (whose unemployment is shockingly high in France and the U.S., particularly among minorities, although historically this is unusual). When the Marxist accusation against capitalism was always that it would drive up unemployment (to keep wages low), the irony now is that quite the opposite is, and has always been, the obvious truth -- a truth which nevertheless cannot be honestly acknowledged in Lefist politics. Instead, a communist like Howard Zinn could still say in interviews (until his recent death) that capitalism cannot create enough employment. Such a person is -- not to put too fine a point on it -- a clueless, blockheaded, and purblind fool. Yet he pulls the Nation, not to mention the poor, down with him.

(2) The hostility of governments and the bien pensants to business makes it increasingly difficult for individuals to start their own businesses and make a go of it. Business taxes, including a doubling of their own Social Security taxation, masses of paperwork, and often pointless and even irrational regulations, impose costs, financial, moral, and practical, that are at least daunting and can easily be crushing. John Stossel once did an experiment of trying to get the needed licenses to start a small business in Bangladesh and in Hong Kong. In Hong Kong, it took fifteen minutes. In Bangladesh, he waited months and finally gave up. Seeing the empty storefronts in Los Angeles, my suspicion is that California is worse than Hong Kong, even if somewhat better than Bangladesh -- and much better than the wasteland of Detroit.

(3) It is not monopoly capitalists but the government that, in Marxist terms, drives the petty bourgeoisie down into the status of proletarians. What survives, of course, are the large corporations that are in rent-seeking league with government and which have the resources of lawyers and staff to deal with all the costly interference of government. Corporations can get sweet deals, but they cannot avoid the compromises and loss of control that go with them. Socialists are consequently motivated to create monopolies, which can then become, in fact or in effect, branches of government, reflecting all the ambitions in social engineering that consume socialist busybodies. It is the purpose of such people to turn the citizens into peons, for their own good, and they cannot do that if everyone has the chance to start their own business, become independent, and realize that "reforming" or "progressive" politicians are actually parasites and enemies.

It is curious how rarely Leftist commentators (and others) seem to be aware that people can (if allowed) start their own business. Yet of all the ethnic groups in American history, the ones with a history of entrepreneurialism and of starting small businesses have consistently done the best economically. At the same time, such successful groups, conspicuously exemplified by Jews, Chinese, Japanese, Armenians, Koreans, etc., often draw nothing but vitriol from the Left -- even from Leftist Jews, who awkwardly find themselves denounced and despised by others, as in the "Civil Rights Movement," whom they would have expected to be allies. But Leftist politics among Jews does nothing to defuse the anti-Semitism that the very success of the Jews, economic, social, and political, effectively promotes. In fact, it exacerbates it. This self-destructive foolishness may also figure in the majority vote that President Obama obtained from Asians and Cubans, despite the economic success, and vulerability to envious assaults, of both groups, which include many refugees from Communism.

And envy it is. The success of the Jews and of the Overseas Chinese has historically drawn violent attacks, always justified by the belief that their success was the result of theft, greed, and exploitation. The grasping capitalist on his pile of gold (just featured in 2012 in a cartoon video put out by the California Teachers Association, and narrated by socialist/communist Ed Asner) is a simple step (or a redrawn cartoon) away from the grasping Jew on his pile of gold. The complaints are equally imaginary and equally self-serving. Many people simply cannot believe that hard work, skill, and imagination can generate wealth and success and can benefit everyone with the goods and services produced. But it is in the interest of politicians, bureaucrats, and mandarins to promote envy and also a greed and a lust for power that is not only in the eye, but also in the heart, of the beholder.

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The Vice of Selfishness, Note 1


I just saw a nice version of this image on a History Channel documentary in a series called, "The Men Who Built America." This was about "robber baron" capitalists, including Cornelius Vanderbilt, John D. Rockefeller, Andrew Carnegie, and J.P. Morgan. The image was of the ranks of striking workers lined up in front of Carnegie Steel in Homestead, Pennsylvania, in 1892. As the workers stood stoically before the plant, men from the Pinkerton Detective Agency, hired by Carnegie's agent, Henry Clay Frick (after whom Frick Collection, in his old house on 5th Avenue in New York, is named), marched up in front and opened fire on the workers. Now, nothing of the sort happened during the Homestead Strike, and this series of "documentaries" is thereby revealed as typical of the lying, anti-capitalist propaganda that now pours out of our educational establishment.

In fact, the striking workers had occupied the plant and the town, and as the Pinkerton men attempted to land in the town from barges, a gunfight erupted. The workers were not standing stoically in passive ranks but were armed and intent on preventing company employees from securing the premises of the steel mill. While there is still a dispute about who opened fire, the barges had already been fired upon, and clearly the workers were prepared to contest the landing. They even used a cannon. Men were killed on each side. Thus, the Pinkerton men never got anywhere near the plant, much less marching calmly up and deliberately shooting unarmed workers. They were pinned down on the river, eventually surrendered, and then were beaten by the mob. The workers were not engaged in any lawful business, either by occupying the plant or contesting the landing of the agents. The Governor of Pennsylvania finally sent in the State Militia and then put the town under martial law. An attempt was made on Frick's life. The Strike was broken.

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The Vice of Selfishness, Note 2


As it has just happened on 16 November 2012 to Hostess Foods -- makers of the iconic Twinky, which many have believed is a food capable of surviving the Apocalypse. Having lost $342 million in 2011, Hostess was already in Chapter 11 bankruptcy, which allows companies to continue business while their finances are reorganized. But now the company has shut down all its 33 bakeries out of the determination that it will be unable to improve its financial condition or emerge from its Chapter 11 state. A particular labor union (the Bakery, Confectionary, Tobacco Workers and Grain Miller International Union), after other unions (including the Teamsters) compromised, was unwilling to accept wage and benefit reductions and went on strike, to the effect of destroying 18,500 jobs, theirs and those of all the other workers. Their accusation, naturally, is that the shut-down is due to "corporate greed"; but you actually cannot be greedy with what you don't have and cannot get, and a bankrupt company is that way because it does not have positive income and it is not a promising enough bet to get money from anyone else.

The folly of this is conspicuous, but perhaps not as foolish as when United Airlines was pushed into bankruptcy (2002) by a pilots strike and damaging wage concessions, at the time (in 2000) when the company was owned by its own employees. The stock of United's "owner-representatives" became worthless, and in 2005 the company defaulted on its pension plan. So where was the "greed" there? The pilots destroyed their own company and finally had to accept wage reductions after all. At least they currently still have jobs, while the Hostess employees will lose theirs.

The attitude of the Bakers and Pilots unions now sounds not unlike that of Gordon Gekko, who said that he was wrecking a company (which is what, we are given to understand, "corporate raiders" did in the '80's) "because it is wreckable." Well, Hostess and United were "wreckable," and the irrationality of destroying the source of their own jobs (although not the jobs of the union leaders, of course) seems to have been lost on the participants. On the other hand, we are beginning to see leadership in some unions who might be happy to see all companies wrecked, because they think that industry should be owned by the government, as in the Soviet Union. That the Soviet economy was a miserable failure is something they may not know, which is hard to credit, or they may just not care. They would rather live in poverty without corporations than be prosperous with them. This sort of lunacy is not exactly greed. It may fall into the category of envy, like much leftist politics.

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