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 is the second of the 5-part essay that attempts to answer the question: Is it good for society if the financial services sector is motivated by greed?. (READ: Greed is Good), This post defines greed and society and set parameters as to what constitutes benefits to society.
Greed and Society
The concept of greed is akin to self-interest, although one can argue that there are subtle distinctions between the two terms. While self-interest looks out for one’s own well-being, greed involves the taking of more than one’s fair share. If one were to equate greed with self interest, one can argue that everything has a self-interest component, and therefore, those who are generous can still be acting for self-interest, i.e., the fulfillment of one’s own desire to help others. For purposes of this paper, while I may talk about self-interest and greed interchangeably, greed is defined as an excessive desire to acquire or possess more, especially with respect to material wealth, than one needs or deserves (Wikipedia).
In discussing whether it is beneficial to society if the financial services industry is motivated by greed, my focus would be the impact on financial markets, its players, and the general public. Society, in this paper, is defined as an economic or financial infrastructure with a set of relations among people. This includes the financial institutions, governmental bodies, clients, and the public at large. Specifically, “benefits” to financial markets relate primarily to actions that would promote market efficiency, which achieves the maximum output with the minimum input and thereby provides abundance of goods and services and ultimately promotes the general welfare. However, fairness is an equally desirable value, both as a means towards efficiency and as an end in itself. Ultimately, people will participate in financial markets only if they perceive markets to be fair (Boatright, Theoretical Perspectives in Finance, 2008). These two values, efficiency and fairness, however, directly relates to the core of the debate on whether greed is beneficial or harmful. In particular, fairness can conflict with efficiency, and painful decisions sometimes need to be made between efficiency and fairness. In the same vein, proponents of greed argue that promoting self-interest leads to efficiency. However, the concept of greed conflicts with fairness since greed connotes the taking of more than one’s fair share, at the detriment of others. It is in this context that we view the conflicts between arguments for and against greed, and a balance needs to be made in resolving the equity-efficiency trade-off.
Watch out for the next part which shall discuss some of the theories that provide the framework for different arguments for or against greed.
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