Is greed good?

Taylor Hickem
20 min readAug 26, 2020


This article is part of a series “Freedom for who” a critique of free market capitalism. To find out how to get involved and join the conversation find out more on the website at

Michael Douglas character Gordon Gekko from the 1987 Oliver Stone 20th century fox film “Wall Street”

Greed, for lack of a better word, is good.

Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.
— Gordon Gekko from the 1987 Oliver Stone 20th century fox film “Wall Street”

Is greed good? While a resolution to this question may not seem to anyone as an urgent concern, greed, or the celebration of each household’s entitlement to maximize their own self-interest is one among several ideas at the heart of free market capitalism.

  1. The Asian Tiger
  2. A false debate
  3. From the horses mouth : Engaging ideas in good faith
  4. Tragedy of the commons
  5. Fundamental questions : engaging in good faith
  6. How big should the state be?

The Asian Tiger

Gardens By the Bay, Singapore

From the late 1980’s with the ushering in of the Volcker shock until the financial crisis of 2008 the influence of the free market ideology would spread from the Asian Tigers to influence economic policy around the world (Birdsall, 2010 ; Jahan, 2014 ; Monbiot, 2016). Since the 1980s globally policy makers have adopted these reforms by lowering corporate taxes, trade tariffs and deregulating financial markets in the hopes of replicating the Asian Tiger miracle at home (Birdsall, 2010 ; Miller, 2020). The sustained success in Asia is used as a living testimony evidence of the ideology’s legitimacy. In 2020 Singapore ranks #1 on the Heritage Foundation global ranking of Economic Freedom report (Miller, 2020). Prior to the COVID-19 pandemic Singapore’s economy has consistently realized real GDP income growth from 1960 and extended into recent years (MAS, 2011). It survived the test of economic resilience through a strong recovery response to three economic recessions in 1985, 1997 and 2008.

The greed that drives capitalism is not the malicious greed of corrupt lobbyists and wealthy elites that extract personal gain by subverting laws and institutions. For lack of a better word it is the normalized greed of households and their interaction with the marketplace as consumers, employees and shareholders fundamental to free market ideology that has broad implicit popular support from Wall Street to Main Street.

One testimony for the popular legitimacy of the ideas can be seen in the speeches from elected political figures in Singapore. In his response to the question of “what is Singapore’s economic strategy?” the Minister of Trade and Industry Chan Chun Sing anchored first on the mandate to provide quality jobs and wages. According to him these jobs come “from quality investments” and he lays out the political economic framework that connects policy to these investment outcomes. He starts with the rhetoric of scarcity “without natural resources, we strive hard to create our own competitive advantages” and then lists 6 policy themes that characterize the Singapore economic strategy — rule of law, policy consistency, business-friendly environment, tripartite alliance, skilled worker and connectivity (Chan Chun Sing, 2020). In short, he affirmed capitalism’s role in the government’s social contract. Free market capitalism is the status quo institution in which we operate and the basis of our social contract with our elected leaders. When we start with the question of how to create systemic change, our journey should lead us to the theories and ideas of how we interact with one another.

A false debate

The debate on free markets goes through phases as different variations of the same basic ideas evolve, rise and wane in popularity. Models, ideas, nuance, compromise and careful analysis of evidence has an appeal only to a certain kind of audience. On the other hand class conflict, deception and good guys vs bad guys has greater potential for a popular narrative. Such narratives are not hard to find on the debate about free markets from a quick google search. Some of the narratives though do not engage the other’s arguments in good faith but instead reduce an opposing side to its most extreme form as a straw man. Starting with identity labels, hardly anyone self-identifies as a “neoliberal”. A more fitting label that they use to describe themselves is “free market capitalism” or “economic freedom”. An example of the disconnected contrast can be seen from the opposing views of a 2016 Guardian op-ed critique of “neoliberalism” by journalist George Monbiot (Monbiot, 2016) with a report by one of the “thinktanks which would refine and promote the ideology” — the Heritage Foundation (Monbiot, 2016 ; Miller, 2020).

On the one hand, the Heritage Foundation report caricatures “alternatives to free market capitalism, such as Socialism or communism”. Unless the report was written for Cuban or Chinese policy makers (in such case it would be a good idea to write it in Spanish or Chinese) these extreme examples have little relevance to party politics in Western Democracies (Miller, 2020). Monbiot’s dips into the same rhetoric in his portrayal of “neoliberalism” as a plot of elites substituting the most heinous actors and quotes as representative of the majority who support the cause. Supposedly these aloof aristocrats are contemptuous to inequality “Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone” and do not appreciate the nuances of rights and freedoms — “freedom for the pike, not for the minnows.” (Monbiot, 2016). He speculates on ulterior motives that these conspirators believe that unions would “impede the formation of a natural hierarchy of winners and losers” (Miller, 2020 ; Monbiot, 2016).

The actual wording of the Heritage Foundation report is more mitigated on several positions. They voice ambivalence on issues such as unions, “ depending on the nature of their activity, may be either a force for greater freedom or an impediment to the efficient functioning of labor markets” (Miller, 2020). Rather than embracing inequality as virtuous, the report instead argues that impatience to remedy it through redistribution is ultimately ineffective in the long run (Miller, 2020). This is not a statement of values but instead a falsifiable claim which can be tested against the weight of evidence. The report also acknowledged the ambiguity of the concept of freedom and its importance to be determined through democratic processes. “No country provides perfect freedom to its citizens, and those that do permit high levels of freedom differ with respect to which aspects they believe are most important. That is consistent with the nature of liberty, which allows individuals and societies to craft their own unique paths to prosperity” (Miller, 2020).

From the horses mouth : Engaging ideas in good faith

Searching for the space for a civil discussion on these fundamental ideas can feel at times like a lonely and disappointing journey. The space for good faith discussion shrinks in an increasingly polarized political universe. This polarized view may distort the wide silent areas of consensus that can escape the spectacle of attention grabbing conflict.

There is hope though that something constructive can come from engaging these opposing sides. It may seem like there is no common ground, until you start looking for it. For example, both sides appear to take credit for the Scandanavian economic models. The Heritage Foundation compliments the “most advanced societies [which] have thus opted for some version of free-market capitalism with various types of government intervention to redistribute resources within society” (Miller, 2020 ; Krugman, 2020). Furthermore not everyone shares the same level of commitment to invest the effort of a thorough good faith argument analysis. This cannot be a reason not to try and a first step is to understand the ideology “from the horses mouth”.

For starters, what is an ideology? According to Alan Greenspan, former Chairman of the US Federal Reserve during the height of the free market era,

An ideology is a conceptual framework with the way people deal with reality. Everyone has one [..] To exist, you need an ideology. The question is not whether it exists but whether it is accurate or not
— Alan Greenspan, 23 October 2008 Testimony to Committee of Government Oversight and Reform

The free market ideology espouses ideas and values of deregulation, individualism, empowerment of capital markets. It can be observed in the wording of economic strategy in and outside of Singapore in defense of economic policy decisions. It is a useful approximation to characterize Singapore’s contemporary and historical economic strategy. The ideas trace their history back more than a century ultimately to Adam Smith in 1776 and can be attributed to several organizations such as the Mont Pelerin Society, Heritage Foundation, Cato Institute, Brookings Institute and influential economists, politicians.

Influential figures of free market capitalism

When people come and say: “But what is the point of working? I can get as much on the dole!” You say: “Look! It is not from the dole. It is your neighbour who is supplying it and if you can earn your own living then really you have a duty to do it and you will feel very much better!”
— Margaret Thatcher, 1987 interview for Women’s Own “there is no such thing as society”

On first principles the idea does not use the word “greed” but instead appeals to one’s sense of autonomy and duty as a provider as a virtue. “Independence and self-respect flow from the ability and responsibility to take care of oneself and one’s family and are invaluable contributors to human dignity and equality” (Miller, 2020). It also takes one step further to morally discredit those that chose a different path and promote competition between individuals, between firms as a force that enforces moral values to “reward individual effort and success” (Miller, 2020). Just as economic freedom is one form of freedom, so in any society there are multiple, potentially conflicting values that emerge through various complex forms of expressions. This dual nature of human motivation acknowledges both individual ambition drives and care for others was recognized by Adam Smith in his Theory of Moral Sentiment (Smith, 1790).

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.
- Adam Smith, 1790 Theory of Moral Sentiment

The promotion of the value of reward for work and delegation of the responsibility of welfare to families and communities is echoed in Singapore in the 2005 budget speech by Prime Minister Lee Hsien Loong (MOF, 2005) where welfare is viewed as a shared responsibility to help the less fortunate members of our community. The better-off must help the poor and disadvantaged — the sick, the elderly, the disabled, and the unemployedand that the state’s role is limited and conditional. “when we do well and have budget surpluses, we can distribute some of them back to Singaporeans”. Singapore’s budget is on the low end of countries on welfare spending as % of GDP (Miller, 2020), and ultimately in the speech PM Lee defends the low taxes by first claiming nationalistic priviledge of non-obligation to follow other successful models in Europe “Our social compact is rather differentand later to appeal to moral values of “personal responsibility” and to “let people keep the fruits of their labour and businesses the rewards of their enterprise” (MOF, 2005). While the strength of the appeal to moral value may rest in the popularity of who it resonates with, the case for property rights and law enforcement claims legitimacy from a legacy of metaphors such as the tragedy of the commons and toy problems in game theory such as prisoners’ dilemma.

Tragedy of the commons

Cleeve Commons, Gloucestershire

The scale up of the basic ideas about how individuals operate into institutions draws on simple models, empirical models and metaphors. One metaphor in particular uses a common grazing area described by Garret Hardin in 1968, the “Tragedy of the commons” (Hardin, 1968). Free market supporters lament collective action failures on shared resources as inevitable tragedy in the absence of an authority to enforce property rights.

[through] the extension and protection of property rights societies avoid the “tragedy of the commons,” the phenomenon that leads to the degradation and exploitation of property that is held communally and for which no one is accountable.
- Miller, Heritage Foundation, 2020 Economic Freedom Index Report

This tragedy is used to set up a dichotomy of choices between either central planning or division into lots of private property. In the essay Hardin describes the general “free rider problem” for managing collective resources using the specific example of a commons — a collective grazing area. If anyone can graze on the field then according to Hardin, the collective resources are doomed to over-grazing as each individual acting in their self-interest would take more than a sustainable share for themselves and leave a smaller amount for the collective. Over time eventually everyone is worse off and the resources are exhausted (Hardin, 1968).

Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit — in a world that is limited. Ruin is the destination towards which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons.
- Garret Hardin, 1968 Tragedy of the Commons

Hardin wasn’t the first to communicate this idea and versions of it can be traced as early as Aristotle (Ostrom, 1990). Hardin’s tragedy is a special class of collective decision frames called “Prisoners dilemma” in the branch of economics called “game theory” (Ostrom, 1990). Game theory deals with multiple agent decisions where one player’s decision is contingent on how other agents will behave.

Prisoner’s dilemma payoff matrix

The prisoners are faced with a similar dilemma as Hardin’s herders in that they receive the best payout when they both cooperate, but receive a loss if the other player defects and a gain if they defect. If there is no enforcement authority and under certain conditions of the relative payoffs, each player has a dominant strategy to defect. The best solution overall for everyone — “Pareto optimal” is not the best solution for each acting in their own self-interest. For each individual they have the most to gain if they free ride and defect while others cooperate. The simple metaphor is compelling to some who may sympathize with the tragedy as the situation may resonate with similar personal experiences in their own life in their neighbourhood or the canteen in the workplace. If the conclusions were a universal truth it would imply the human species to have a severe adaptive disadvantage to other social species which have evolved better cooperation behaviors and this is the “tragic” conclusion Hardin makes explicit in the essay.

In such games the belief about how others influence each agent’s decision whether to cooperate or defect. According to Hardin self-interest is taken as a given so he concludes that the only remedy for such a situation is through two types of enclosure strategies — either to enclose a single manager (the state model) or to divide up the commons into private rights (the market model). Hardin’s tragedy is a progressive message that the natural state of the world is not self-correcting and needs government intervention for enclosure and establishment of enforcement institutions. This metaphor is characteristic of how the ideology connects the axioms about human motivation and behavior to institutional design.

Fundamental questions : Engaging in good faith

We should dig deeper beyond the false debates into the fundamental ideas at the heart of the argument for free market capitalism. Is a system based on facilitating the greedy (for lack of a better word) ambitions of individuals the best way to advance prosperity? When we remove the non-debates, seven questions remain that speak to the heart of the ideas of free market capitalism. :

  1. Measuring prosperity
  2. Human behavior model
  3. Tragedy of the commons
  4. Investment time horizons beyond a single lifespan
  5. Competency of the state as an investor
  6. Fairness for the bottom, top and the middle
  7. Optimal size of government.

How do you measure prosperity?

It’s not sufficient to agree that we want freedom and prosperity if we cannot agree on how that is measured. Is your income, and the states GDP the best representation of what we mean when we say “prosperity”? Access to clean running water, electricity, shelter, education and healthcare are meaning improvements with universal appeal. Furthermore it may not be so controversial to suggest that personal autonomy for self-enrichment, creative expression have strong popular appeal, and the same goes for the potential social benefits of clean air, science, innovation and enterprise. Where the line becomes grey is whether prosperity is served through consumption of non-essential indulgences on fast fashion, jewelry, mansions, far flung holiday getaways and even harmful products such as added sugars, fast food, tobacco and gambling. Even more difficult — is this concept of prosperity a zero-sum quality? Does my neighbor’s prosperity or the idea of the prosperity of my progeny compliment or subtract from my subjective sense of prosperity?

Is a rational, self-interest and profit maximization agent an accurate and useful model of human behavior?

We share an awareness of the limits of our own decision making and those around us, although we would like to think of ourselves generally rational most of the time. Is this accurate though, given that we are not machines but instead real biological artifacts capable of defective and irrational behavior? How important are the exceptions? As the saying goes “All models are imperfect, some are useful” so is this a close-enough approximation to how we actually make decisions on aggregate, or is it fundamentally flawed and misleading? Would you end up concluding on the same policies if you used a more accurate model?

Is there a third alternative to the firm or the state to manage the public commons?

Hardin’s tragedy of the commons feels like a compelling inevitability, but is it true? How do we explain public goods like Wikipedia and the internet protocols which do not appear to be managed by institutions that fit the models of the profit maximizing firm nor the monopoly of force of the state. There are reported cases historical and contemporary of successful alternative models from indiginous communities to cooperatives in Europe. Are these cases exceptions, fragile? Or, are there lessons to be learned which can be generalized, reproduced and scaled? Would the lessons ultimately end up as versions of the same basic forms of the state and the firm or is there a true third alternative?

Can the market solve problems on very long time horizons beyond individual lifetime?

A heuristic in bond markets is that investment decisions are usually on 10–20 year time horizons. That time horizon corresponds to the span of time in an adult’s life from their mid 30’s when they would have the opportunity for savings to the beginning of their retirement. The set of investors who make buy and sell decisions on longer scales 50–100 years is a much smaller corner of the financial markets. The capacity for governments to plan on such time scales may be even shorter to one election cycle (3–5 yrs) and this could depend on their perceived security of political legitimacy. So is there any institution which is capable of investment on super-lifetime time horizons, and between the state and the markets which is a more qualified investor for the long game?

Are market agents better investors than the state?

The investment of capital has the potential for solving problems and creating jobs so does it matter qualitatively whether it is done by the state or the market? There are cases of corruption and misallocation of resources by the market and the state, so if they each are comparable to one another then on what basis would there be a case to limit the size of government?

Is there a way to improve welfare at the margins of society in a way that is non-threatening to the majority?

Are inequalities an inevitability, or could they even serve a beneficial purpose for society? Similar to the question about a third alternative for managing the commons, the question on inequality may be less of a difference in values and more of a lack of confidence that alternatives would achieve the results that they intended. There have been attempts at state redistribution in the past, some more successful than others. There are many possible reasons for why some individuals do well at some things and others don’t. So the saying goes you can feed a person today or you can teach them to fish so that they will be free from hunger for a lifetime. Investments in human capital through education are one way to improve poverty and inequality at the root cause, but it takes generations to see the effects and still may not be enough to address large accumulations and imbalances of family inheritances. Can too much of a helping hand from the state or the community lead to learned helplessness or undermine an individual’s sense of personal responsibility. Does society lose something when the laws require the wealthiest to give up a large share of their success?

How big should the state be?

Markets cannot function under complete lawlessness, and also need a steady supply of an educated, healthy workforce so how big should the government be? How would any government tell if it is too big or too small? Does the scope for government services depend on the stage of development? How does the size of the government budget affect the economy in ways that are independent from the quality of how the taxes are raised and spending is distributed?

Tax burden and direct-to-indirect tax as a function of GDP per capita 80 countries 1970–2009 Source : Santiago Acosta-Ormaechea and Jiae Yoo, 2012 Tax Composition and Growth: A Broad Cross Country Perspective

Take the example of the question of government size. Among economic institutions — IMF, OECD, the consensus is nuanced (Miller, 2020 ; IMF, 2014 ; IMF, 2013). The relationship between government size and economic growth is featured in a number of research studies. The concept of economic growth used here is intended not to refer exclusively to wages, unemployment or the imperfect measure of GDP but instead used to refer to long term sustained accumulation of all forms of capital — physical, human and intellectual and increasing productivity. Some areas of general agreement are that any government activity either spending or tax distorts market operation in some way (Miller, 2020 ; Barro, 1990 ; Angelopoulos, 2006). Depending on how the tax or spending is applied creates a different kind of distortion. The ideology of liberalization is unambiguous in its intention to minimize such distortions as it is seen as a threat to economic freedom (Miller, 2020).

Higher tax rates reduce the ability of individuals and firms to pursue their goals in the marketplace and thereby lower the level of overall private-sector activity. Individual and corporate income tax rates are an important and direct constraint on an individual’s economic freedom.
— Heritage Foundation Economic Freedom Index report, 2020

Distortion here is only to mean that it changes the way that the economy would have operated in the absence of the tax, which could have good or bad consequences depending on the context. Taxes on payroll or capital may influence the relative flows or share of labor/capital and investments, whereas taxes on consumption may have a more direct effect on the labor-education-leisure trade-off (Barro, 1990, Angelopoulos, 2006). The Heritage Foundation also acknowledges the need for some limited forms of government spending for “infrastructure, fund research, or improve human capital [..] public goods, the benefits of which accrue broadly to society in ways that markets cannot price appropriately” (Miller, 2020).

Criticisms of government spending

  1. only short-term effects
  2. bias towards deficit spending and externalize the mismanagement of public finances through the inflation tax
  3. more vulnerable to corruption
  4. crowds out private investment

The range of case studies of states as investors in economic growth is diverse, with some examples that confirm the criticisms whereas others are counter-examples. The first claim listed that government spending has only short-term effects is unsubstantiated. Reports by the IMF, OECD and other economists on government fiscal policy are clear between the difference between long term public investments and short term counter-cyclical interventions (IMF, 2014 ; UN DESA, 2020 ; OECD, 2008). Concerns about fiscal consolidation and anti-corruption in the the second and third claims are points of caution shared by authors from both sides of the debate. Corruption and fiscal irresponsibility however are not inevitabilities in higher taxed countries as there are examples of states with high marginal tax rates which have strong transparent government institutions that maintain fiscal discipline over multiple decades. Specific case studies are the Scandanavian countries (Schettkat, 1999). Wagner’s law and Baumol’s cost disease are two theories that describe respectively, the general tendency for the demand and costs of public service to increase as the average income of an economy increases (IMF, 2014 ; Nyasha, 2019). The theory of crowding-out of investments due to higher interest rates and labor wages is complemented with theories of crowding-in.

Crowding-in could occur where the state fills the role markets are less willing such as risk-takers in deep-tech R&D and public goods infrastructure and education whose benefits cannot be easily appropriated for private returns. In a 2008 ECB working paper 14 European countries were studied for the effects of crowding-in and crowding-out (Alfonso, 2008). The study found mixed results depending on the country of crowding-in with some countries observing a positive response and others seeing a negative response (Alfonso, 2008). In general returns in the form of tax revenue collection were usually positive but not as high as for private investments (Alfonso, 2008). In contrast another panel study from 2004–2014 and 14 countries found positive evidence of crowding-in behavior of private investments from public investment in renewable energy (Deleidi, Mazzucato Semieniuk 2019).

To those willing to put the time into search, for each of these questions there is a body of research reviewing the theory and evidence towards a deeper understanding of the truth.


Alfonso, 2008 ECB working paper No 864 Macroeconomic rates of return of public and private investments. crowding-in and crowding-out effects

Angelopoulos, 2006 Tax-spending policies and economic growth: Theoretical predictions and evidence from the OECD

Barro, 1990 Government Spending in a Simple Model of Endogenous Growth

Birdsall, 2010 The Washington Consensus : Assessing a Damaged Brand

Chan Chun Sing, Minister for Trade and Industry 2020 Response to Parliamentary Question on Singapore’s economic strategy

Deleidi, Mazzucato Semieniuk 2019 SOAS Dept of Economics Working paper 226 : Neither crowding in nor out: Public direct investment mobilising private investment into renewable electricity projects

Hardin, Garret, 1968 Tragedy of the Commons

Hare, Poole 2014 The Polarization of Contemporary American Politics

International Monetary Fund (IMF), 2013 Fiscal Monitor : Taxing Times

International Monetary Fund (IMF), 2014 Public Expenditure Reform Making Difficult Choices

Jahan, 2014 What is Keynesian Economics?

Krugman, 2020 Bernie Sanders Isn’t a Socialist

Los Angeles Time, 1995 2 Senate Liberals Back Balanced-Budget Rule

Monetary Authority of Singapore (MAS), BIS, 2011 Papers No 57 : recent developments in Singapore economy

Miller, Heritage Foundation, 2020 Economic Freedom Index

Ministry of Finance (MOF) 2005 Budget speech 2005

Monbiot, George, 2016, Neoliberalism — the ideology at the root of all our problems

Nyasha, 2019 Government Size and Economic Growth: A Review of International Literature

OECD, 2008 Growing Unequal ? Chp II.4 How much redistribution do governments achieve? The role of cash transfers and household taxes

Ostrom, Elinor, 1990 Governing the commons

Santiago Acosta-Ormaechea and Jiae Yoo, 2012 Tax Composition and Growth: A Broad Cross Country Perspective

Schettkat, 1999 Small economy macroeconomics: The economic success of Ireland, Denmark, Austria and the Netherlands compared

United Nations Department of Economic and Social Affairs (UN DESA), 2020, World social report : inequality in a rapidly changing world

Smith, Adam 1790 Theory of moral sentiment

Thatcher, 1987 interview for Women’s Own “there is no such thing as society”



Taylor Hickem

Applied research, engineering, and projects for solutions to sustainable cities. SG Green New Deal