That greed drives the market is a common place idea. You can find it discussed at length in almost any beginning economics text book. The great founding text of economics was Adam Smith's, The Wealth of Nations published in 1776. Perhaps the most commonly quoted line from that book is, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” This line is commonly sited to defend the notion that the market runs on greed, or at least self-interest.
That hypocrisy runs democracy may have first been introduced by Economist Gordon Tullock's 1971 article in The Journal of Economic Inquiry "The Charity of the Uncharitable."
Tullock's idea was that as the probability of casting the deciding vote in an election with a large number of voters is essentially zero, so it costs essentially nothing to vote according to one's values, even if that means voting against one's self-interest. So while self-interest generally trumps values in the market, in democracy values tend to trump self-interest, particularly when the electorate is large.
Tullock was a libertarian and very pro-market and at least somewhat anti-democracy. I am an enthusiastic supporter of both institutions and so I take a more positive view of democracy. I believe we may reasonably hope that our government will be somewhat benevolent and fair because of the benevolence of the butcher, the brewer, the baker and the other voters because those voters know that voting for their sense of benevolence and fairness is very likely to cost them nothing.
If greed really ran the market single men would be better employees than married men because they do not have to share their earnings with a family. But employers usually preferred the family man as more stable than the single man who only supported himself and his love of beer. So it might be reasonable to argue that the market is largely driven by the virtue of adults trying to support their family.
Furthermore, there is nothing particularly bad about voting for your values rather than your self-interest. If people are only willing to help others when it costs them nothing then they are weakly benevolent, but surely that is better than being malevolent. Furthermore, many may combine the weak benevolence of voting against their self-interest with actual sacrifices for the good of humanity.
So the cynicism of this page is for the purpose of humor and irony, and should not be taken as absolute truth.
The government, on the other hand, threatens to put you in jail. Governments in past threatened to kill, maim, and torture. The government gains its power be producing what might fairly be called bads. The government controls through coercion, and usefully it controls coercion. We do not want an efficient system of coercion. We want coercion to be controlled in a benevolent and just manner. So democracy is useful because it tends to produce a benevolent and just government.
The above thoughts on democracy and the market are part of a much larger theory of how the Western Institutions came to be. I have now put this on line.
Here is an index to my other pages on economics, and a short review of my qualifications in this field.
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Last updated March 12, 2020
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