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A Screed on Need and Greed

Mises Daily: Thursday, July 22, 2004 by

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For two years, we have been innudated with denunciations of "corporate greed" that has supposedly created scandal and led to prosecutions of CEOs. The greed of the fatcats is nicely contrasted with the "need" of the middle class and the poor. And so with these two little words we recreate a Marxian-style drama of class conflict based on human motivation.

These two words should be treated with care. Not only do they lack clear meanings, but they have been systematically abused to trigger the use of government power to coerce others. As Joseph Sobran put it, "'Need' now means wanting someone else's money. 'Greed' means wanting to keep your own. And 'Compassion' is when a politician arranges the transfer."

The problem with using need in any analytical sense is that it assumes away an essential aspect of economics—the fact that in a world of scarcity, choice is unavoidable. Such choices also include tradeoffs among various "needs." Therefore, calling something a need adds nothing but confusion to the analysis.

The word need diverts attention from the actual choices faced. It also implies that since people ought to have what they need, someone else must therefore have the responsibility to pay for such things if they cannot or will not. Need carries this implication even more strongly than "right," since that calls attention to the fact that when government gives one what they assert a right to, it must violate the rights of those forced to bear the burden.

Economists must also insist on the term self-interest rather than greed or selfishness. After all, greed is in the eye of the beholder and there are many motives for acquiring command over resources that are not greedy or selfish, but do advance purposes people care about. For example, when Mother Teresa used her Nobel Prize money to build a leprosarium, she was not acting out of greed, but was acting in her self-interest. And everyone's behavior reveals similar concerns that extend well beyond their narrow, selfish interests. Further, in terms of social cooperation, whether people are greedy is largely irrelevant—offering someone command over more resources can induce voluntarily cooperation, regardless of the purposes those resources will be put to.

The misuse of need and greed creates conflict whenever some people "who can afford it" do not volunteer to finance someone else's need, as seen by that person or a third party who wants to help them with other people's money. Then they are accused of heartlessly putting their greed before others' need.

Unfortunately, that accusation includes a glaring inconsistency. Such critics are equally subject to their criticism of doing less than they could for the problem at hand. In effect, they say "I could do more than I now do for this cause, but choose not to (i.e., I do enough, in my own eyes); you, however, are to be forced to do more." 

The real questions about social and political affairs concern not motivations but institutions. The case for a market economy, writes Mises, rests on the logic of human action, which "is independent of the motives that cause it and of the goals toward which it strives in the individual case. It makes no difference whether action springs from altruistic or from egoistic motives, from a noble or from a base disposition; whether it is directed toward the attainment of materialistic or idealistic ends; whether it arises from exhaustive and painstaking deliberation or follows fleeting impulses and passions." (Epistemological Problems)

Even if someone is greedy, regardless of how morally objectionable someone else considers it, that greed is turned to socially useful ends by reliance on voluntary arrangements. And no other way of arranging our relationships has that property. Whenever coercion is allowed, the "insurance" each has that others require his consent is taken away, and greed is turned to other people's harm. That is why property rights, which limit people to voluntary arrangements, are best understood not as helping greedy people, but as the defense of what people have legitimately acquired from the greed of others who would like to take it from them.

Since other than through theft, government transfer schemes are the most common means of turning the greed of some into harm for others, a better understanding of greed and need comes from Thomas Paine's warning: "Beware the greedy hand of government, thrusting itself into every corner and crevice of industry." And animating that greedy hand are those who want to advance their purposes with other people's resources. Further, judging from what such efforts actually accomplish, talking about needs is just the rhetorical garnish necessary to sell morally indefensible political coercion to those who choose not to think too carefully about the real issues involved.

Coercion cannot eliminate either need or greed. It only puts more power, particularly the power to harm others, in the hands of those centuries of experience have revealed are no less likely to be greedy. The only thing that can ultimately help individuals meet their "needs," without infringing on others' ability to meet their own, is the opposite—freeing them from the power others have to dictate to them. Only that takes away the mechanism by which the greed of the politically powerful can harm those they claim to serve.

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Gary M. Galles is a professor of economics at Pepperdine University. Send him MAIL, and see his Mises.org Daily Articles Archive. Discuss this article on the blog.