Economics 101 & Public Square

Is Free Enterprise Based on Greed?

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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

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  • Josh bland

    Excellent article this is exactly related tobalaceand proper interpretation of scripture well done you are a credit to the faith

  • This is a good and robust defense of free enterprise and serving the customers, as the virtuous outcome of the system.

    However, there are greedy people.

    And often greedy people, under capitalism, become richer than the non-greedy people.

    While this is perceived as a negative, and in fact I think it is a negative, it is not really a relative negative. It is a negative sin of human nature, that every real system has to handle. And under capitalism, greed is handled by pushing the greedy to become better servers of the normal customers.

    How do alternative systems handle greed? Those who most complain about the greed in free enterprise are seldom honest about their alternative system. Under socialism, the greedy become boot-licking bureaucrats and functionaries of the Party. After the fall of the Berlin wall, many of the most successful business people in the ex-commie countries were former commies. Much of this was crony-capitalism, but much of it was also that many greedy folk are willing to do whatever the system requires of them in order to “get more”.

    Under military dictators, the greedy become military officers eager to demonstrate their loyalty and ability to command obedience.

    Other real systems, and how they handle greed, should be honestly compared, rather than a real market-capitalism with real people, many who are greedy, compared to some imaginary never seen “ideal” non-capitalism.

    Ayn Rand was terribly wrong about greed and selfishness being virtues, but she was right that, under capitalism but NOT other systems, the honest greedy act in ways that are most helpful to fellow men. (Discussion of dishonest greedy must way for another blog post.)

  • Myra

    Having read Rand’s Virtue of Selfishness, it should be titled Virtue of Self-care. She posits that if we don’t seek to care for ourselves (i.e. our health, physical and mental), then we can hardly be of a benefit to others. Unfortunately, people can’t see past her word choice. Nor can they see past her being a non-believer. Yet, even as a believer, I agree that we have a duty to take care of ourselves so that we may serve others.

    Aside from that sticking point, I wholly agree with your view. As I also agree that true selfishness (putting self above God) is wrong.

    Yes, there are those who abuse free enterprise, as noted in the comments, but there are those that abuse whatever system they are part of. It is sin, the world, that drives this. But we can offset that through our own Christ-like behavior. And pray for those caught in greed.

    • Jay Richards

      I agree. What Rand means to say is often different from what one might
      reasonably understand her to be saying. Or, to put it differently, she often
      uses idiosyncratic definitions of words, such as “altruism” and “selfishness.”

      there’s still a problem here, Since selfishness in reality is something like
      disordered self interest, by using the word “selfishness” to refer to something
      like “rational self interest,” Rand ends up muddling in the minds of her
      readers–and I suspect, in her own mind—rational self interest (or self care)
      with its disordered state.

      • Sam Leahey

        @Jay Richards. Would love to learn your response to @disqus_9Evfr526eQ:disqus below??

  • shopagent

    Free enterprise may not be based on greed, however greed is one of most common motives of people who create their enterprises or manage companies

  • Aaron M

    There is only one noble endeavor with regards to economics: loving one’s neighbor as one’s self. Free enterprise is just as susceptible to the destructive forces of greed as any other form of economic governance.

    I’ve read enough of these blog posts here to recognize that this institute is leading an exercise in eisegesis, to cloak Austrian economics in Christian faith. Works like these, which seemingly seek to validate perspectives which may seem questionable to Christians (as opposed to sharing the faith with non-Christians), should throw red flags. Christians need to trust their instincts (that still, small voice of God that speaks to our hearts through our conscience) with regards to ethical decision-making and economics. God has made it incredibly-simple. From Matthew 22:

    36 “Teacher, which is the greatest commandment in the Law?”

    37 Jesus replied: “‘Love the Lord your God with all your heart and with all your soul and with all your mind.’ 38 This is the first and greatest commandment. 39 And the second is like it: ‘Love your neighbor as yourself.’ 40 All the Law and the Prophets hang on these two commandments.”

    And from 1 John 3:

    17 If anyone has material possessions and sees a brother or sister in need but has no pity on them, how can the love of God be in that person?

    Simple scriptural truths and living by the example set by Christ in the manner in which He lived a life of sacrifice are the guiding principles for us in our economic decision-making; and they should greatly-inform social policy. Principles of people like Adam Smith, F.A. Hayek, and the like are secondary concerns.

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