Greed is Good

Here’s an essay I wrote back in 2010 when I was taking up Ethics in my MSc in Capital Markets, Regulation and Compliance course at the ICMA Center, University of Reading, UK.  The paper itself is quite lengthy, so I will be posting bits and pieces.  It seems so obvious that greed is not good, yet, time and again we have seen people who try to rationalize greed.  Read on to learn their point of view.

This post is an introduction.

Is it good for society if the financial services sector is motivated by greed?

greed“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…has marked the upward surge of mankind. And greed, mark my words, will… save….that other malfunctioning corporation called the USA.” (Stone, 1987). Powerful words from the fictional character, Gordon Gekko in the 1987 film “Wall Street” — the same words that have personified modern capitalism and have captured my fascination as I contemplated on writing this essay. As we anticipate the sequel “Wall Street: Money Never Sleeps”, more people are drawn once again to the concept that greed is indeed good, natural, and necessary for the success of financial markets. A quick discussion with fellow ICMA students show that I am not alone in finding the allure of Gekko’s creed, inasmuch as we are trained to believe the economic theory of the rational investor. Yet, the onslaught of the global financial crisis should at least give cause for a pause…is greed really good?

As we are slowly recovering from the global financial crisis, the debate about greed has never been more interesting and timely. While many believe that greed is good for economic progress, others blame greed for most of the financial scandals and crises in history. The Archbishop of Canterbury Dr. Rowan Williams, for instance, blames greed as the cause of the recent financial crisis (Beckford, 2008). Furthermore, Willett (2009) wrote that the Wall Street Journal suggested that a culture of greed may be to blame for the financial crisis, while billionaire investor Stephen Jarislowsky said that he thinks “extreme” greed was to blame. The views on greed are varied, and attempting to come up with a stand on this issue is a difficult process.

invisible hand theory

Invisible hand theory

This essay attempts to answer the question “Is it good for society if the financial services sector is motivated by greed?” There is no consensus on this topic: some argue that greed works as effective incentives, thereby promoting efficiency, while others counter that greed is harmful to society – motivating excessive risk-taking and causing massive failures such as the cases of Enron, Worldcom and more recently, the global financial crisis.

In answering this question, I first define greed and society and set parameters as to what constitutes benefits to society. Second, I discuss some of the theories that provide the framework for different arguments for or against greed. Specifically, I discuss the concepts of the invisible hand theory, egoism, and to a certain extent the shareholder theory as support for the argument that it is beneficial for society if the financial services sector is motivated by greed. On the other hand, the stakeholder theory supports the other view. Finally, I conclude that given the special role financial services sector plays in the economy, and ultimately society, it is not good if this sector is motivated purely by greed. The issues of fiduciary duty, agency theory, and conflicts of interests provide strong arguments for putting constraints in the pursuit of self-interest and that there is need for ethics and standards in the financial services industry.

Watch out for the next part, “Greed and Society”.



(n.d.). Retrieved March 26, 2010, from Wikipedia:

(n.d.). Retrieved March 26, 2010, from Wikipedia:

Beckford, M. (2008, October 15). Retrieved March 29, 2010, from

Boatright, J. R. (2008). Ethics in Finance. MA: Blackwell Publishing.

Boatright, J. R. (2008). Financial Ethics: An Overview. In J. R. Boatright, Ethics in Finance (p. 6). MA: Blackwell Publishing.

Boatright, J. R. (2008). Theoretical Perspectives in Finance. In J. R. Boatright, Ethics in Finance (p. 31). MA: Blackwell Publishing.

Boatright, J. R. (2008). Theoretical Perspectives in Finance. In J. R. Boatright, Ethics in Finance (p. 46). MA: Blackwell Publishing.

Carson, T. L. (2003). Self-Interest and Business Ethics: Some Lessons of the Recent Corporate Scandals. Journal of Business Ethics , 389-394.

Duska, R. F., & Clarke, J. J. (2002). Ethical Issues in the Financial Services. The Balckwell Guide to Business Ethics .

Llewellyn, D. (1999, April). The Economic Rationale for Financial Regulation. FSA Occasional Paper . London: Financial Services Authority.

Smith, H. J. (2003). The Shareholders vs. Stakeholders Debate. MIT Sloan Management Review . North Carolina.

Stone, O. (Director). (1987). Wall Street [Motion Picture].

Willett, B. (2009, April 7). Retrieved March 26, 2010, from




2 thoughts on “Greed is Good

  1. Pingback: Greed and Society | My Green Juice

  2. Pingback: Greed is not Good | My Green Juice

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s