Is greed an inherent problem for free enterprise?

[Ridgerunner]

Augustine and Aquinas defined “justice in trade” as one man giving to another that which he values less for that which he values more.

So, if I want milk, and if it costs $4.00 (or whatever) and I give $4.00 for it, I am giving that which I value less for that which i value more, at least in the moment. Since that $4.00 represents a few minutes (to some seconds, to some hours) of my time, I am valuing the milk more than I am my time I spent in earning the $4.00. The milk seller values the $4.00 more than he values the milk, or he wouldn’t sell it for $4.00.

“Free enterprise” is a circumstance in which I can achieve “justice in trade”. I’m free to buy or not buy, sell or not sell, the milk.

As surprising as it may be to some, the horrid workplaces in Bangladesh or Calcutta actually represent an effort on the part of the people there to better their lives. They come from the countryside where things are even worse. They think they can achieve improvements in their lives (and probably can, on their scale) by giving time they value less for money they value more. They will then give the money they value less for the rice or their daughter’s dowry, or an ox to draw a cart, or whatever, that they value more.

That doesn’t mean we should all cheer for factories in Bangladesh or Calcutta, but we need to at least understand that the way we value something is not the same as another man might do. It takes a lot of effort and struggle for a country to “capitalize” itself, and it takes surplus earnings, even if they’re meager, and time, to do it.

Now, when a government, a mafia, a mullah or someone else with power dictates to me that I shall trade “X” for “Y”, even if I don’t value “Y” more than “X”, or if the authoritarian decrees arbitrarily that “Y” is going to cost “X+Z” instead of just the “Y” it would cost if trade was free, that’s “Injustice” in trade.

Imbalances caused by fiat are destructive to an economy because it skews the values and destroys the voluntariness. As they used to say in the Soviet Union: “As long as they pretend to pay us, we’ll pretend to work.”

 

[JimG]

National and multi-national corporations via the stock market, and usury promote greed.
The only solution is the dissolution of the stock market and big banks, and the promotion and support for family businesses.

Are you advocating just the dissolution of the stock market? Or the dissolution of stock companies–i.e. corporations? I’m wondering how a small business acquires capital for expansion if it can’t sell stock in the company. The only other way is by borrowing. But most people investing money into a business would like more than interest on money for the trouble, they would like an ownership interest, which Is what stock is.

And of course, if their was stock but no stock market, such investment would be illiquid and less likely.

I’m wondering whether Google or Apple could have been effective companies without access to capital markets.

Would you also object to the current trend of “crowd funding” or “cloud funding?”

 

[Robert_Sock]

Augustine and Aquinas defined “justice in trade” as one man giving to another that which he values less for that which he values more.

So, if I want milk, and if it costs $4.00 (or whatever) and I give $4.00 for it, I am giving that which I value less for that which i value more, at least in the moment. Since that $4.00 represents a few minutes (to some seconds, to some hours) of my time, I am valuing the milk more than I am my time I spent in earning the $4.00. The milk seller values the $4.00 more than he values the milk, or he wouldn’t sell it for $4.00.

“Free enterprise” is a circumstance in which I can achieve “justice in trade”. I’m free to buy or not buy, sell or not sell, the milk.

As surprising as it may be to some, the horrid workplaces in Bangladesh or Calcutta actually represent an effort on the part of the people there to better their lives. They come from the countryside where things are even worse. They think they can achieve improvements in their lives (and probably can, on their scale) by giving time they value less for money they value more. They will then give the money they value less for the rice or their daughter’s dowry, or an ox to draw a cart, or whatever, that they value more.

That doesn’t mean we should all cheer for factories in Bangladesh or Calcutta, but we need to at least understand that the way we value something is not the same as another man might do. It takes a lot of effort and struggle for a country to “capitalize” itself, and it takes surplus earnings, even if they’re meager, and time, to do it.

Now, when a government, a mafia, a mullah or someone else with power dictates to me that I shall trade “X” for “Y”, even if I don’t value “Y” more than “X”, or if the authoritarian decrees arbitrarily that “Y” is going to cost “X+Z” instead of just the “Y” it would cost if trade was free, that’s “Injustice” in trade.

Imbalances caused by fiat are destructive to an economy because it skews the values and destroys the voluntariness. As they used to say in the Soviet Union: “As long as they pretend to pay us, we’ll pretend to work.”

I don’t see the trading as always being fair, such as when I’m forced to pay outrageous prices for food and rent otherwise I starve or become homeless. There’s also the issue of exploitation of needy workers, whereby they either work in unbearable conditions or starve; not much of a choice, is there?

 

[JMJ91]

Are you advocating just the dissolution of the stock market? Or the dissolution of stock companies–i.e. corporations? I’m wondering how a small business acquires capital for expansion if it can’t sell stock in the company. The only other way is by borrowing. But most people investing money into a business would like more than interest on money for the trouble, they would like an ownership interest, which Is what stock is.

And of course, if their was stock but no stock market, such investment would be illiquid and less likely.

I’m wondering whether Google or Apple could have been effective companies without access to capital markets.

Would you also object to the current trend of “crowd funding” or “cloud funding?”

I am advocating the dissolution of stock companies, i.e. corporations. At one time in American history, individual states had the authority to dissolve a corporation within its jurisdiction which was not being ethically responsible, or upholding the common good. When the Supreme Court granted ‘personhood’ to corporations it changed the moral fabric of America.

At the very least, national corporations and multinational corporations should be curtailed. They have an unfair advantage in the political realm of electing our government officials and securing appointments to Federal agencies which are suppose to protect the worker, the consumer, and the environment rather than corporate interests.

To what advantage is there in the expansion of family businesses, which do not have the capital to expand? Is bigger always better? It seems to me that family businesses should be an integral part of a local community…not communities. We all need to be accountable to the community in which we live, including businesses.

Corporations are beholden to the financial interests of the stock holders, not to the common good of a local community. For that reason, corporations encourage greed, and not the common good.

I am speaking as a layman, and frankly, I do not know what crowd funding, or cloud funding is all about.

 

[moriah]

If the government does not regulate corporations, who will? Certainly not the corporations themselves for whom profits are benefitted by lack of regulation! There is a correlation between deregulation and oppression of the poor. Corporations are not rooted in ethics but in fact, greed, as there can never be large enough profits. So, yes, free enterprise is inherently greedy. Corporations have no limits and will even go so far as to kill human beings for money; cigarette producers and sellers are an excellent example of this.

 

[St_Francis]

Are you advocating just the dissolution of the stock market? Or the dissolution of stock companies–i.e. corporations? I’m wondering how a small business acquires capital for expansion if it can’t sell stock in the company. The only other way is by borrowing. But most people investing money into a business would like more than interest on money for the trouble, they would like an ownership interest, which Is what stock is.

And of course, if their was stock but no stock market, such investment would be illiquid and less likely.

I’m wondering whether Google or Apple could have been effective companies without access to capital markets.

Would you also object to the current trend of “crowd funding” or “cloud funding?”

I will date myself here… I remember life without Apple or Google. We actually survived without them. Life was tough back then, I admit, but we did survive.

 

[Abu]

Is greed an inherent problem for free enterprise?

A typically foolish question, from one with a one-track mind, away from the Catholic mind, as “inherent” = “existing as an essential constituent or characteristic”, and the tendency to greed exists in mankind as part of the fallen nature, well-known to real Catholics who have stressed this reality here. Since every human activity is subject to both the good and bad aspects of human nature, the obvious remedy for mankind is formation in the good and true with the determination to do good and avoid evil.

So those that never learn because they are trapped in their own prejudices will never come to just and sensible solutions to anything as long as they remain mired in their prejudices.

As commerce is part of human endeavour it needs to be subject to wise laws that curb evil (as in any human endeavour) as has been established ad infinitum.

 

[stinkcat_14]

Is greed an inherent problem for free enterprise?

A typically foolish question,

Actually, it is not a foolish question, it is a perfectly reasonable question, even if our biases would lead us to believe that it is not worth considering.

from one with a one-track mind, away from the Catholic mind, as “inherent” = “existing as an essential constituent or characteristic”,

I think we can all agree that since the garden, greed has been an issue.

and the tendency to greed exists in mankind as part of the fallen nature, well-known to real Catholics who have stressed this reality here. Since every human activity is subject to both the good and bad aspects of human nature, the obvious remedy for mankind is formation in the good and true with the determination to do good and avoid evil.

True, greed is part of our fallen nature. Now a very relevant question is whether our society is structured in such a way to encourage or discourage greed. So the question is far from foolish.

So those that never learn because they are trapped in their own prejudices will never come to just and sensible solutions to anything as long as they remain mired in their prejudices.

I think a lot of people are trapped in their prejudices regardless of their views on this topic.

As commerce is part of human endeavour it needs to be subject to wise laws that curb evil (as in any human endeavour) as has been established ad infinitum.

Of course, the question is, what should those laws be and are there any other structures that encourage or inhibit greed, such as religious ideals, competition, etc.

 

[Ridgerunner]

I don’t see the trading as always being fair, such as when I’m forced to pay outrageous prices for food and rent otherwise I starve or become homeless. There’s also the issue of exploitation of needy workers, whereby they either work in unbearable conditions or starve; not much of a choice, is there?

Of course trading isn’t always fair. Nothing is “always fair” this side of Eden. But fairness does find the most fertile ground where there is voluntariness in exchange.

Of course, in this country, you really aren’t being forced to pay outrageous prices for food or rent, either one. Both are greatly cheaper, relatively speaking, than anywhere else. Do you really think you can make food still cheaper if you remove all profit from food production? The Soviets tried that, and millions starved. And, of course, there are tax incentives to the creation of housing in this country; reduced now by Obamacaretax, but still sufficient to cause some to build it.

Indisputably, needy workers elsewhere in the world do work in near-unbearable conditions. Of course, if the conditions were truly unbearable to them, they wouldn’t do it at all. But in this country, work conditions are far from unbearable.

 

[stinkcat_14]

And, of course, there are tax incentives to the creation of housing in this country; reduced now by Obamacaretax, but still sufficient to cause some to build it.

Of course one of the biggest barriers to affordable housing is excessive regulation, particularly at the local level. I have a lot of land at my house and I could easily park three mobile homes on my property and rent them out to young families. However, the local regulators would have a fit.

 

[Contarini]

If those corporations had not been able to pay lower wages in those nations, they would not have gone there; they would have stayed here and continued to employ us at union wages and the people over there would have starved to death.

Or maybe a local business would have developed that paid people just wages . . . .

 

[Contarini]

Because no government has ever been greedy?

Today, wanting someone else’s money is called ‘need,’ wanting to keep your own money is called ‘greed,’ and ‘compassion’ is when politicians arrange the transfer.

There is no such thing as “your own money,” except in a relative and qualified sense. All money belongs to God, and it is held by individuals in trust. Wanting someone else’s money isn’t called need. Need is called need.

Edwin

 

[stinkcat_14]

Or maybe a local business would have developed that paid people just wages . . . .

Here is the problem with that. I was recently in a developing country where the primary method of getting internet was to go to an internet cafe. The cafe we went to was in a very nice building where there was a small storefront which had ten computers in it. The owner of the business charged about 80 cents an hour to use the computer, so in a good hour she made about $8 in revenue, ignoring costs. How does a local business like that pay a living wage?

 

[Contarini]

Here is the problem with that. I was recently in a developing country where the primary method of getting internet was to go to an internet cafe. The cafe we went to was in a very nice building where there was a small storefront which had ten computers in it. The owner of the business charged about 80 cents an hour to use the computer, so in a good hour she made about $8 in revenue, ignoring costs. How does a local business like that pay a living wage?

I don’t know what a living wage would be in that country, or how the wages of this person’s employees (if she had any) would compare with those of a large corporation offering the same services. But at least she is making a decent living for herself instead of being paid a pittance by a global corporation.

Again, I’m a distributist, not a socialist. The ideal is to have as many people as possible owning their own businesses and their own land, whether as individuals or as part of some kind of cooperative venture.

 

[tafan]

My personal opinion is that free enterprise promotes greed, and that a strong government is needed to circumvent it.

I have not read all of the thread, but here are my thoughts (I voted no btw).

1. Free enterprise (note: I am not equating it to capitalism) is the natural form of mankind’s economic social behavior. The alternative is coerced enterprise: ie. people do what their strong government tells them to do. Recent examples are fascism and communism (to varying degrees).
2. greed (as are the other capital sins) is an inherent problem for mankind due to our fallen nature. It is a result of our concupiscence, which itself is a direct result of original sin.
3. Can you name me an example of a society with a strong government, that does not have a problem with greed?

The solution to greed is not to abandon free enterprise, the solution to greed is not to establish a utopian government that will banish it. The solution to greed is for people to follow virtuous lives. The capital sins are each opposed to direct virtues.

 

[JimG]

I will date myself here… I remember life without Apple or Google. We actually survived without them. Life was tough back then, I admit, but we did survive.

Oh well, yes, I remember life without them as well. In a lot of ways I liked it better. I remember a world without the Internet as well. And for centuries we lived without the telephone, without newspapers or books. But the telephone caught on as something people wanted. It started as a family business, but the invention’s usefulness would have been sorely limited if the company had not expanded. And it’s hard to have a family owned telephone network.

There’s nothing inherently wrong with seeking outside investors for a business in exchange for a piece of the ownership. And there’s nothing inherently wrong with investors wishing to be able to sell or buy their shares in as easy a manner as possible or to buy shares in other businesses. One might abolish stock exchanges, and that would put a drag on economic activity. But even abolishing stock exchanges wouldn’t prevent trade. People would just buy and sell their shares on Ebay! (with less regulation)

 

[St_Francis]

Or maybe a local business would have developed that paid people just wages . . . .

I’ve been avoiding getting into the development of locally-owned small businesses and the like since it seemed like raising the curtains on a whole nother area of economics in Robert’s threads.

 

[St_Francis]

Oh well, yes, I remember life without them as well. In a lot of ways I liked it better. I remember a world without the Internet as well. And for centuries we lived without the telephone, without newspapers or books. But the telephone caught on as something people wanted. It started as a family business, but the invention’s usefulness would have been sorely limited if the company had not expanded. And it’s hard to have a family owned telephone network.

There’s nothing inherently wrong with seeking outside investors for a business in exchange for a piece of the ownership. And there’s nothing inherently wrong with investors wishing to be able to sell or buy their shares in as easy a manner as possible or to buy shares in other businesses. One might abolish stock exchanges, and that would put a drag on economic activity. But even abolishing stock exchanges wouldn’t prevent trade. People would just buy and sell their shares on Ebay! (with less regulation)

Yes, I do think there is something wrong with it. I think that having owners who are not involved in the business and to whom one is yet responsible for a return causes a lot of moral difficulties. The main owner is often forced to cut corners whether he wants to or not, and the corporations we have now have nothing even approaching a center of moral responsibility at all–it’s all servants bowing to the absentee owners, who can sue them if they don’t provide a sufficient return.

A business with non-local owners sucks money away from the locale in which the business operates.

And all the usual about corporations having too much political power.

An option to funding would be to be able to provide a loan and this become a “short-term” partner, sharing all the risks with the regular owner of the business.

 

[JimG]

Yes, I do think there is something wrong with it. I think that having owners who are not involved in the business and to whom one is yet responsible for a return causes a lot of moral difficulties. The main owner is often forced to cut corners whether he wants to or not, and the corporations we have now have nothing even approaching a center of moral responsibility at all–it’s all servants bowing to the absentee owners, who can sue them if they don’t provide a sufficient return.

A business with non-local owners sucks money away from the locale in which the business operates.

And all the usual about corporations having too much political power.

An option to funding would be to be able to provide a loan and this become a “short-term” partner, sharing all the risks with the regular owner of the business.

I suppose one could have a business in which all funding was acquired through borrowing and not through equity. That would be a company which offered bonds but never stock. A bondholder has a greater claim on the company assets than a stockholder, but he can still lose if the company goes under. A stockholder’s share can become worthless, and it not infrequently has done just that, but he may also be able to share in the company profits through dividends or share in the company’s growth by capital gains.

I just don’t see the inherent evil in that. Sure it’s possible for a billionaire to buy up a controlling interest in a company and he could do damage as a major stockholder, but so could any owner who mismanages a company, even a family owned business.

And anybody with money, not just corporations, has a lot of political power. Politicians seek out people with money because they need it for all those saturation TV ads.

 

[Robert_Sock]

I have not read all of the thread, but here are my thoughts (I voted no btw).

1. Free enterprise (note: I am not equating it to capitalism) is the natural form of mankind’s economic social behavior. The alternative is coerced enterprise: ie. people do what their strong government tells them to do. Recent examples are fascism and communism (to varying degrees).
2. greed (as are the other capital sins) is an inherent problem for mankind due to our fallen nature. It is a result of our concupiscence, which itself is a direct result of original sin.
3. Can you name me an example of a society with a strong government, that does not have a problem with greed?

The solution to greed is not to abandon free enterprise, the solution to greed is not to establish a utopian government that will banish it. The solution to greed is for people to follow virtuous lives. The capital sins are each opposed to direct virtues.

I’m new at this sort of knowledge, but relatively speaking, I believe China and Cuba have a much less of a problem with greed. The same may be said of Canada and the more socialistic Scandinavian countries.