Source: Self made
The third chapter of Wealth and Poverty focuses on dispelling the myth that the gears of capitalism are greased by greed. Ultimately, capitalism is motivated by exchanging goods for the benefit of both parties. The Returns of Giving outlines how “Free market transactions continually improve the distribution of goods in a community by moving them from owners who value them less to owners who value them more.” To be successful in a capitalist system, an entrepreneur must determine how to provide a good that is preferred to their competitors. George Gilder also points out how even though capitalists are presumably self-interested, they still bring great benefit to the consumers through diversity and competition in the market. If a system does not provide the incentives of a capitalist system, it is fundamentally crippled because it significantly hinders industry development by disincentivizing entrepreneurs and preventing small businesses from being able to rise to compete with established businesses.
Greed is an uncontrolled longing for further material or social gain. Although some capitalists may be motivated by feelings of greed to some degree, capitalism itself is not motivated by greed because it requires a controlled distribution of capital to continue to be used to the benefit of an entrepreneur. A successful capitalist must put their consumer above any feelings of greed they may have, or they will not see continual success within a capitalist system. The competitive nature of the free market means that cornering as much of the market as possible is the avenue for the most profit to be made. John D. Rockefeller cornered such a large portion of the oil industry because he was simply better than his competitors. He found a way to lower his prices, be more efficient, and push his competitors to be bought out by him. As a result, he became the first ever person to reach a personal nominal fortune of one billion dollars. One could certainly claim that a man who’s net worth was over 1% of the United States GDP at the time was motivated by greed, but it isn’t as though this negatively impacted anyone. Oil was incredibly cheap under Rockefeller, his workers were among the best paid, the competitors he bought out were often paid in shares of Standard Oil so they would continue to see benefits as the company grew, and his revolutionization of the oil industry is part of what paved the way for the American motor industry. In addition, he is estimated to have given away around 540 million dollars to various charities over the course of his life. Bearing all of this in mind, can it be claimed that the most successful capitalist in the last century was motivated by greed, and if so, how can that be seen as a bad thing given all the good he spread?
Under other systems, such as a communist system, not only is there a lack of incentives for entrepreneurs but the system itself is not conducive to new entrants being able to compete. As Gilder explains, the “lack of dynamism and flexibility” makes it so new entrants struggle to compete with established competitors. Because the capitalist system is far more efficient in providing businesses with a profit, they are better able to reinvest this profit or seek investors who will share in this profit which in turn enables faster growth. Gilder further explains that a system which forces redistribution only provides a means for the rich and ambitious to exploit others for their own benefit, without having to provide a real benefit to those they take from. Further, Gilder explains that systems of force redistribution do not consist of the same “responsible giving”. He explains that this responsible giving is the sacrifice people make to do things such as support their families or perform useful services. Capitalism as a system forces us to look for a need, and to give something that satisfies that need so that we will in turn be rewarded in some capacity while also solving the needs of others. It is a system that promotes a net gain through natural incentives, unlike communist systems which pursue equality by taking from those who are already giving, and supplementing what their compensation should be with what the state deems they need. Overall, the goal of capitalism is to find a need and fill it. It promotes looking out for your fellow citizens by naturally incentivizing you to provide them with what they need by allowing you to profit from their needs.
