Selfishness, Greed and Capitalism - Institute of Economic Affairs

233 Pages·2014·1.63 MB·English

Christopher Snowdon
Selfishness, Greed
and Capitalism
Debunking Myths about the Free Market

Selfishness, Greed and Capitalism

Selfishness, Greed and
Capitalism
Debunking Myths about the Free Market
CHRISTOPHER SNOWDON
The Institute of Economic Affairs
First published in Great Britain in 2015 by
The Institute of Economic Affairs
2 Lord North Street
Westminster
London SW1P 3LB
in association with London Publishing Partnership Ltd
www.londonpublishingpartnership.co.uk
The mission of the Institute of Economic Affairs is to improve understanding
of the fundamental institutions of a free society by analysing and expounding
the role of markets in solving economic and social problems.
Copyright © The Institute of Economic Affairs 2015
The moral right of the author has been asserted.
All rights reserved. Without limiting the rights under copyright reserved
above, no part of this publication may be reproduced, stored or introduced
into a retrieval system, or transmitted, in any form or by any means (elec-
tronic, mechanical, photocopying, recording or otherwise), without the prior
written permission of both the copyright owner and the publisher of this book.
A CIP catalogue record for this book is available from the British Library.
ISBN 978-0-255-36679-3 (interactive PDF)
Many IEA publications are translated into languages other
than English or are reprinted. Permission to translate or to reprint
should be sought from the Director General at the address above.
Typeset in Kepler by T&T Productions Ltd
www.tandtproductions.com
Printed and bound in Great Britain by Page Bros
‘I think there is a truth, and I think that economists have
found a significant amount of the truth in economic
behaviour. There are a lot of things we do not know, but
there are also a lot of things we do know, which non-
economists get completely wrong.’
Gary Becker (Herfeld 2012: 85)

CONTENTS
The author x
Foreword xi
Preface xv
Summary xvii
List of figures and tables xxi
Part 1
The Straw Men 1
1 Capitalism relies on greed and selfishness 3
Incentives and the invisible hand 4
The parable of the steel company 11
Is greed good? 15
Conclusion 18
2 Economists believe people are perfectly
rational 22
Some models are useful 23
Rational choice and behavioural economics 25
Have we found angels to govern us? 28
Rational consumers and irrational voters 34
Conclusion 35
vii
CONTENTS
3 Economists think GDP is all that matters 37
A blind obsession? 40
No design for life 45
Conclusion 47
4 Economists think we live in a free market 49
A free market is not anarchy 49
Capitalists don’t like free markets 53
Planning, private and public 58
Conclusion 60
PART 2
The Myths 63
5 The rich get richer and the poor get poorer 65
Higher wages for all 66
The progress of the poor relative to the rich 71
Conclusion 76
6 We are working ever longer hours 78
Conclusion 84
7 Rich countries will not benefit from more
economic growth 87
Growth scepticism 90
In defence of growth 92
Conclusion 96
8 There is a paradox of prosperity 99
Other people’s consumerism 104
Ferraris, Porsches and other preferences 110
Conclusion 118
viii