Is greed really good?

FOR most of the 20th century in the West, governments oversaw national economies. In the US, Theodore Roosevelt reined in the robber barons before his distant cousin Franklin occupied the commanding heights of the nation by mobilising resources to counter the Great Depression and then to fight World War II. But in the 1970s, high inflation and industrial strikes made it apparent that government control of the economy no longer worked. Thus in the latter half of that decade, with the growth of the post-war decades petering out, people sought a new economic model.

In response, Margaret Thatcher and Ronald Reagan captured the zeitgeist, and Western economic orthodoxy took a dramatic turn. The Civil Rights Movement and the counterculture of the 1960s and early 1970s took a back seat. Spurred on by low interest rates and the rhetoric of a dynamic, deregulated economy in which the market would allocate capital more efficiently than the government ever could, individuals pursued wealth.

While Mrs Thatcher and Mr Reagan were the political advocates of this change, its ideological proponents were two radical thinkers, economist Milton Friedman and philosopher Ayn Rand.

In 1970, the New York Times Magazine published Milton Friedman's essay, The Social Responsibility of Business is to Increase its Profits. In it, the Nobel Prize-winning economist challenged General Motors to neglect its "social responsibilities" - which were, specifically, to build safer and more fuel-efficient cars - and focus on maximising returns to shareholders by continuing to produce unreliable gas-guzzlers. Instead of becoming more profitable, as Mr Friedman expected, General Motors alienated baby-boomers who were seeking safer and more environmentally friendly vehicles. This growing part of the market turned to Japanese car makers - companies which understood that protecting the lives of road users and environmental preservation supported the bottom line.

Japanese companies have not been the only ones to dismiss Mr Friedman's definition of responsibility as bunk. Closer to home, Jack Welch, CEO and chairman of GE from 1982 to 2001, called it "the dumbest idea in the world". Jack Ma, founder and CEO of Alibaba, said that "customers are number one, employees are number two and shareholders are number three". And Tim Cook, CEO of Apple, said that the company's ultimate aim is "to leave the world a better place than we found it".

Even Paul Tudor Jones, the Connecticut-based hedge fund manager, believes that Mr Friedman's logic is flawed. "Shareholders have benefited at the expense of labour, and that has had a huge social impact on this country," he said, speaking of the growing wealth disparity in the US. The questioning of these leading capitalists suggests that a redefinition of the social responsibility of business is long overdue.

THE PURSUIT OF HAPPINESS

US President Donald Trump is not known for being a great reader, which may help explain why he considers Ayn Rand to be his favourite writer. Ms Rand's philosophy has significantly influenced American society in recent decades - in a 1991 opinion poll by the United States Library of Congress, her major work - Atlas Shrugged - was cited as the most influential book after the Bible.

Her philosophy, at its core, is simple: We should be selfish in order to pursue our own happiness. Called Objectivism, it argues that personal contentment is the moral purpose of life, productive achievement is the noblest activity and that an individual's sense of reason is the only absolute. Sadly, Ms Rand practised what she preached. She was described by those close to her as haughty, narcissistic, devoid of empathy and, ironically, unhappy.

In the political context, Ms Rand argued that governments should not ask the general population to take an interest in the welfare of the poor, sick and elderly. Sure, people can help the needy if it creates personal satisfaction, but charitable giving or wealth redistribution is purely optional rather than a social duty. It follows that Objectivism has been key in justifying the individualism (and narcissism) that has spread in the US since the Reagan era. European philosophers, and the majority of their US peers, have largely dismissed Ms Rand as, at best, a minor philosopher and an individual who lacked empathy. Yet it would be a mistake to underestimate the influence that she continues to exert on many sectors of life, politics and business in the US - and by extension, the West. Like a physician fighting a virus that has unexpectedly transformed into a disease, society needs to find a cure.

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