When you think of market competition, you might get the stereotypical vision of Gordon Gekko from the movie Wall Street. We often envision capitalists as cut-throat competitors who will do anything to get ahead and make a buck, including stealing from others. We rarely picture executives sharing and cooperating with one another as part of their self-interest to serve the common good.
This week’s video helps us understand why markets foster cooperation rather than greed. When people pursue their long-term self-interest, they tend to cooperate. Markets provide incentives for long-term thinking. We don’t just care about today; if we did, no restaurant you eat in would ever clean, no insurance company would actually pay a claim, and no car manufacturer would test the brakes before selling the car.
Have you ever wondered why the real-life Gordon Gekkos are the exception and not the rule? If markets foster such egregious greed and theft, we would see markets dominated by this bad behavior and presumably prisons filled with CEOs. Ultimately no economic growth or prosperity would take place.
Greed starts with a condition of the heart and is carried out when we hurt others to get what we want. Greed necessarily involves harm and theft. Jeremiah 6:13 tells us this is the condition of the sinner’s soul:
From the least to the greatest, all are greedy for gain; prophets and priests alike, all practice deceit.
This is why we need a set of rules, norms, and a culture that minimizes greedy actions and fosters cooperation for the long-term benefit of every single person. Markets help accomplish this. That’s why thieves hate markets. Thieves have trouble surviving within market settings because they have to operate outside the system to thrive.
Going back to the example in the video, two competing department stores will cooperate with each other to identify dishonest customers and protect their merchandise. This makes it much easier for the customer to simply pay for his merchandise instead of tearing up the bill. If he did the latter, he would soon find that no one would be willing to sell anything to him.
How does this play out on a larger, societal level? The system of cooperation fostered by market exchange breaks down when companies lobby government officials to rig the marketplace to serve their purposes at the expense of their competitors. This is not market trade—unfair interventions and policies which favor particular businesses are collectively known as “cronyism.” In this country, the free-market system is being hijacked by cronyism and it’s harming prosperity and flourishing.
That’s why markets need virtuous people participating in them. It’s not enough that markets dissuade greedy behavior; we need markets buttressed by integrity, the value of hard work, and honest competition. In short, we need the biblical principles of character to bolster markets to their highest potential. This is what will stop cronyism, and within well-functioning markets, it’s what lessens theft too.
Are markets the best way to curb the negative effects of greedy behavior? Leave your comments here.