Greed Is Bad. Envy Is Good!

We live in an amoral world, where arguments based on moral norms and values are often greeted with suspicion or derided as ‘quixotic idealism’, ‘irrational nostalgia’ and the like. However, two of the seven ‘deadly sins’ in Christian tradition have recently been extensively debated in public discussions about economic matters: greed (avaritia) and envy (invidia).

Most people probably associate the phrase ‘greed is good!’ with the character of Gordon Gekko from the 1987 movie ‘Wall Street’. It is also related, however, to one of the fundamental assumptions of economic liberalism. Indeed, it summarises – albeit in very crude fashion – the key argument of Bernard Mandeville’s 1714 book The Fable of the Bees where he argued that ‘private vices’ will result in ‘public benefits’. Mandeville opposed the view that a society based on virtuous citizens could prosper economically. Rather, it was the self-seeking nature of human beings that ultimately constituted the basis for economic prosperity. His main example was the one of vanity – a private vice – in which he saw the main cause why the British fashion industry could flourish; providing employment and promoting economic growth in Britain.

Based on this analysis, economically liberal thinkers have ever since argued that the inherently ‘crooked’ nature of human beings does not constitute a problem for society, because the invisible hand of the market – if left to its own devices – will transform individual selfishness and even greed into beneficial economic and societal outcomes. After all, as Adam Smith pointed out, we do not rely on the bakers’ benevolence to get our daily bread, but on his regard for his own, economic interest.
Therefore, selfishness, profit seeking, and greed are not a problem, but both an inevitable fact of human nature and beneficial traits, because it is these features that ultimately drive entrepreneurial activity and economic growth. On this account, then, greed is good indeed!

This view has increasingly come under fire at least since the onset of the Global Financial Crisis that started sometime in 2007/2008. Many commentators have put the responsibility for the crisis squarely on bankers’ greed and their obliviousness of the risks associated with the strategies they pursued with a view to increase their bonuses and the value of stock option plans. This criticism has also spurred the debate about executive pay beyond the banking industry. In response to a public outcry about the seemingly ‘obscene’ levels of CEO pay in a time of unemployment and fiscal austerity, various countries have adopted measures to curb executive pay.
In parallel, the overall wealth and income distribution in Western societies has become a topic of public debate once again. This is notably because some people feel – rightly or wrongly – that in many countries the welfare cuts that affect the poorest in society, are not paralleled by a contribution of the rich to improve the country’s fiscal situation, e.g. through increased taxation at the top end of the income ladder, wealth-, or inheritance tax.

Envy – immoral, petty, and dangerous

Defenders of CEO compensation levels and of income and wealth inequalities put this sort of criticisms down to one of the worst private vices, i.e. ‘envy’. [1] Indeed, the phrase ‘politics of envy’ has made a remarkable comeback in recent years in particular in the media.
The phrase ‘politics of envy’ is often used to delegitimise left-wing attempts to capitalise on the wide-spread malaise about the level of executive pay and about inequalities.[2]
The Daily Mail, in the run up to the UK general election of 2015, for instance, interpreted the Labour party’s proposal to increase the top income tax rate as resorting to the ‘politics of envy’ and to class hatred in a desperate attempt to displace the Tory government.
Reducing the unease with inequality to a question of envy in order to delegitimise polices that focus on issues of redistribution, equality or ‘social justice’ is obviously not new. In a book from 2001, the Spanish intellectual Gonzalo F. de la Mora talked about ‘Egalitarian Envy’ and castigated the left’s striving for social justice. Back in 1966, Helmut Schoeck  – an American sociologist of German origin – in a book called 'Envy: A Theory of Social Behaviour' explored the role envy played in human society. He concluded that left-wing movements – including Marxism, socialism, and the new left movements of the 1960s – had their roots in people’s inability to control their envy.

From this perspective, envy is a petty, irrational, and dangerous sentiment that has – at best – the potential to prevent others from excelling and society from progressing; At worst, it stirs up the masses, promotes class hatred, and threatens the stability of society. Clearly, many journalists, politicians, and certainly the economic elite would agree with this analysis. Greed is good, but envy is bad!

Here I want to turn this argument on its head and show that it might be the other way round. Envy, rather than being a dangerous, subversive sentiment that can be instrumentalised by communists and other revolutionaries to overthrow the capitalist society, may be an important mechanism that makes human societies more – not less - stable. There are two potentially beneficial aspects of envy that should be considered alongside its negative aspects.

Envy – greed’s evil twin or the flipside of the same coin?

With the first one, even economically liberally-minded people may agree, as it is essentially the flipside of the greed story: Friedrich Nietzsche in his 1880 tale ‘The Wanderer and his Shadow’ (‘Der Wanderer und sein Schatten’) spoke of ‘Envy and her noble sister’.

The envious man”, he writes, “is susceptible to every sign of individual superiority to the common herd, and wishes to depress every one once more to the level—or raise himself to the superior plane.” (p.195).

Interestingly, therefore, Nietzsche sees two possible reactions to the feeling of envy: one is to try and hold back those who excel. The other one is to strive to become more like them. That’s what Nietzsche refers to as the ‘good and bad Eris’ (the Greek goddess of discord) respectively.
While envy can lead to socially harmful behaviours that block the progress of individual people and society as a whole, the positive side of envy is– according to Nietzsche - essential to modern society. It is by comparing yourself to others and desiring what they have that people become motivated to strive for personal advancement. So, envy may not be greed’s sisters, but it may at least be its cousin, rather than its (communist) evil twin.

Envy – an early warning system?

There is a second way, however, in which envy may have a beneficial role to play in human societies, which is probably not compatible with an economically liberal view of the world.

The French philosopher and comparative literature professor René Girard developed a human anthropology based on two basic mechanisms: First, ‘mimetic desire’ and, second, ‘the scapegoat mechanism’ (here is a good, very brief summary of his works).
In a nutshell, Girard argues that one of the basic traits of human nature is to imitate others. Indeed, this is the reason why humans are very good at learning. Imitating others implies also, however, that we become more similar to them and end up wanting the exact same things. Therefore, imitation and mimetism may lead to conflicts and tensions among people, which could lead to a situation where life in society degenerates into a war of all against all. That is where the ‘scapegoat effect’ comes in. Given the tensions that exist in any human society due to imitation and mimetism, a mechanism is needed to periodically reduce these tensions (‘clear the air’, so to speak). According to Girard, this mechanism is a cycle of mimetic violence that takes place when the struggle of all against all turns towards a specific victim (the scapegoat) that takes the blame for an undesirable situation. Society becomes united once again in its struggle against the victim that has been singled out; violence is discharged against it; and the order in the society restored. According to Girard this is in biblical terms how ‘Satan expels Satan’ (see his book I See Satan Fall Like Lightning).
This fundamental anthropological mechanism explains not only the nearly universal appeal of the story of the martyrdom of Jesus of Nazareth, but also the recurrent phenomenon of pogroms against minorities.

It does not seem too much of a stretch to argue that envy plays an important role in this process. My argument is of course not that cycles of mimetic violence are a good thing or that pogroms are a positive phenomenon. Rather, given the inevitable nature of mimetic desire, tensions, and the potential for mimetic violence, envy may be an important evolutionary mechanism that allows it a society to detect tensions and react to inequalities before they degenerate into a cycle of mimetic violence.

Economically liberals usually see inequalities – at least up to a point – not only as something natural, but also as an important motivator and reward mechanism in capitalist societies. Yet, one would be hard pressed to fundamentally disagree with the nowadays often-quoted observation by Aristotle that extreme levels of inequality may lead to the breakdown of a democratic society. To be sure we cannot directly apply Aristotle’s arguments to the context of the 21st century. Still, the general idea that while some inequality may be inevitable or even ’good’, there is certainly a level above which the effects of inequality are bad for both economic outcomes and social peace. This seems to be an increasingly widely-acknowledged fact. The global financial crisis of 2008 as sparked off a new debate about inequalities in Western capitalist societies. Piketty’s book ‘Capital in the 21st century’ played no small part in this development, but the topic was also picked up on by various social movements (e.g. the ‘We are the 99%' movement). But even, Forbes has recently asked whether inequality levels in the US may lead to a revolt.

Large inequalities can indeed have very negative effects on societies, and inequality is at least partly the result of greed. Greed – if left unchecked – is likely to lead to income distributions that are sub-optimal for a society in various ways. Poverty at the other end of the income distribution – and the host of social and health problems that go with it – is the most obvious example for such a negative effect; negative effects on demand for consumer products may be another one. If extreme levels of inequality are indeed bad, then envy may be good: Rather than envy being the cause of societal unrest and ‘revolt’ as the Daily Mail, Schoeck and others would have it, envy may simply be a symptom that points towards an unsustainable situation. It may be human nature’s evolutionary response to the fact that too much inequality may lead to the breakdown of society. Envy is a signal that indicates that potentially worse sentiments are festering in a society. In this way, large-scale envy allows it to spot the onset of a cycle of mimetic violence and may allow it to nip it in the bud. In other words, envy may be the little red light that starts blinking, tells you that something is amiss in a society, and that it is maybe time to do something about it. Envy – rather than being a social explosive – may ultimately be the trigger that makes swing back the famous ‘Polanyian pendulum’ towards better regulated markets, more egalitarian income distributions, and hence a more peaceful and stable society.

[1] The Oxford dictionary defines envy as “A feeling of discontented or resentful longing aroused by someone else's possessions, qualities, or luck

[2] Just how widespread the malaise is at least in the UK can be seen from this poll.