December 4, 2015

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Greed is good, after all

Greed is good. Those were the literal words of my finance professor. My heart protested. My heart strongly disagreed. But my mind overruled: “This is how business is done, so greed is good“. Not surprisingly. I had spent all my savings on this expensive business school education with a single purpose: to learn how business is done.

I fully embraced the statement, because it made even logically sense. Economics in a capitalist society is based on the thoughts of Adam Smith. He said that in competition, individual ambition serves the common good. In other words, it is in the best interest of everyone to pursue your own interests. Game theory has great examples to proof this point and to date, I still support the idea itself. But there is an issue.

Own interests

The big problem is that only very few people intrinsically know their own interests. The majority of people think they know their own interests, but in reality they don’t know it at all. They have fallen prey to societal conditioning. Their ‘own’ interest is the exact same ‘own’ interest as every one else’s. Success in life and in business is only expressed in numbers and money. And this is the reason why in economy at large we have not reached the Pareto and Nash equilibriums of economic game theory. We are all pursuing the same thing, or, quoting from the very relevant movie A Beautiful Mind, “We are all going for the blonde!”

Over time, this has fostered into cut-throat competition in an over saturated and narrow minded market place, where participants do not shy away from using less ethical or fraudulent practices. And to date, little has been learned from the financial collapse in 2008.

If we really want to change this economic landscape, we have to pursue our real own interests. And that is where the challenge lies: how can you find your own interest?

We tend to think we know what we want in life. We want freedom. We want happiness. But is that really so?

Thought experiment

Let’s do a thought experiment here. Let’s say I possess a machine that can hook up your brain. Via electrodes and chemical tubes, the computer controls all your brain functions. It can stimulate and excite all areas of your brain. So even if you just sit in a chair, the computer can make you see, hear, think and feel anything.

So if you want happiness, this machine can give you happiness instantly. You can design your life, feed it to the computer, hook up and live happily ever after till the end of your life. Great, isn’t it?

The question is: would you want that? Think about it.

Most people reject this idea. They claim their experience would not be real. And that is somehow strange. Our entire lives we are arduously striving for that very same happiness – but when the ultimate solution is offered, like in this thought experiment, we opt out. So there is something in us that does not necessarily want happiness. By further thinking it through, people will say that they really want is the experience. And hence, the experience therefore isn’t necessarily only joy.

Hard-wired

I believe that what people are after is growth. Growth is hard-wired into our system. Not surprisingly, that is what we see in Nature all the time. All flora and fauna grows. And even at the end of life of an individual specimen, its remains provide nutrition for growth of other species.

If growth is really what we are after, one could assert that greed is the desire for growth. Could you argue with that? Is greed good?

Greed is Good

Well, first of all I believe growth is good. And with growth I do not mean material growth, I mean personal growth. So if greed is explained as a desire for personal growth, yes, by all means, greed is good. I would encourage everyone to be as greedy as possible. If a capitalistic system can somehow replace the desire for material growth with desire for personal growth, I believe the world will rapidly become a better place.


Tags

game theory, greed is good, personal growth, thought experiment


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