Is free enterprise based on greed? Friends and foes of free enterprise often claim greed is its basis. Writer Ayn Rand even claimed that selfishness is a virtue (it’s not, as Hugh Whelchel argued in a recent post).

Greed, according to the Christian tradition, is one of the seven deadly sins. If free enterprise is based on that, then Christians can’t be capitalists or entrepreneurs.

An exploration of entrepreneurship reveals more virtues than vices, though, and leads us to the next myth in our series on the eight most popular myths about wealth, poverty, and free enterprise: the Greed Myth.

Myth #5: the Greed Myth – believing that the essence of free enterprise is greed. 

Free enterprise is not based on greed. The truth is much more interesting. Rather than inspiring greed, free enterprise encourages entrepreneurs to succeed by:

• Delaying their own gratification.

• Investing their wealth in creative yet risky ventures that may or may not pan out.

• Anticipating the needs of others: entrepreneurs must first create something of value before they can profit.

Many critics of free enterprise look at entrepreneurs and miss these points. They see only superficialities. They notice entrepreneurs work with money and seek to multiply it. They associate greed with money, money with entrepreneurs, and so greed with entrepreneurship.

This reasoning fails to distinguish modern entrepreneurs from medieval misers. Entrepreneurs don’t look at their money but through it, to what they can accomplish using money as a tool.

It’s also easy to miss the virtues underlying the actions of many entrepreneurs:

• Unlike gluttons and hedonists, entrepreneurs set aside much of their wealth instead of consuming it.

• Unlike misers and cowards, entrepreneurs invest and risk what they have saved, rather than hoard it.

• Unlike skeptics, entrepreneurs exhibit faith and trust in their neighbors, their employees, their business partners, and their society.

• Unlike the self-absorbed, entrepreneurs anticipate the needs of others.

• Unlike the impulsive, entrepreneurs make disciplined choices.

These virtues led George Gilder to conclude that,

The grasping or hoarding rich man is the antithesis of free enterprise, not its epitome. 

So, free enterprise and entrepreneurship aren’t necessarily based on greed. In fact, competition between entrepreneurs in a free economy becomes altruistic competition, instead of dog-eat-dog, not because the entrepreneurs have warm fuzzies in their hearts or are unconcerned with personal wealth. Competition in this context becomes altruistic because entrepreneurs seek to meet the needs and desires of others better than their competitors.

Dispelling this myth doesn’t dispel the danger or presence of greed. Greed is still a sin, one we’re all prone to commit. As Art Lindsley says, “Greed is an equal opportunity employer.”

The gospels are full of accounts where Jesus addresses greed and money.

• Matthew 6: 19-24: “Do not store up for yourselves treasures on earth…but store up for yourselves treasures in heaven…For where your treasure is, there your heart will be also.” Here Jesus is talking about the person who hoards, who trusts in possessions rather than God.

• Luke records sermons in which Jesus commands his disciples to stay watchful, to trust God for their needs, to seek first God’s kingdom. Luke 12 contains several examples. Again, Jesus is hitting on our ultimate loyalty and trust, which must lie in God and his provision, not with our own plans and possessions.

This is a recurring theme in the Bible when it comes to money: we’re all in danger of misplaced loyalty. If we’re wealthy, our wealth is a likely recipient of our loyalty. This warning applies to you, and it applies to me.

Greed, miserliness, and hoarding are rightly condemned in scripture. But the greedy, the misers, the hoarders – these are the stereotypes of free enterprise. The real men and women who live out the entrepreneurial vocation are often far different from these caricatures. They save, they serve, they take principled risk. This is the essence of free enterprise, not greed.

This post is adapted from the book Money, Greed, and God.

What do you think? Is greed the essence of free enterprise? Leave your comments here.