Index to Western Institutions, Democracy, Freedom, Market, & Empiricism
By Richard Bruce BA, MA, and PhC in Economics
Former Instructor St. John's University, New York City

The West Turns Greed into Efficiency and Hypocrisy into Justice

The market runs on greed, democracy runs on hypocrisy. As both greed and hypocrisy are abundant both of these key Western institutions are very successful, and so Western societies from their beginnings in ancient Greece until today have been very successful.

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 in economist Gordon Tullock's 1971 article"The Charity of the Uncharitable." published in The Journal of Economic Inquiry.

Tullock's idea was that 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. He was also 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. Those voters will be benevolent because they know that voting for their values will probably cost them nothing.

Democracy and Market Not Opposed

Furthermore, the pro-market crowd should note that the first market economy was the first democracy, ancient Athens. Democracy and the market economy were born together and for two and a half millenia democracies have always run their economies through the market. Yet the libertarians and other pro-market extremists are sure it will all end soon. This is a case of blind prejudice on their part. As Nobel Laureate Paul Samuelson pointed out Nobel Laureate Friedrich Hayek's road to serfdom is the road never taken. Historically there is not one example of a democracy doing what Hayek predicts that democracies will do every time. A broken clock is right twice a day. Over a period of two and a half thousand years it would be right upwards of two million times. The democracy kills the market thesis has not been right once, and yet it is still widely believed. It is what another Nobel Laureate, Paul Krugman, calls a zombie idea. Even though it has long been disproven it still shambles along eating brains as it goes.

Irony vs. Truth

I have claimed that democracy runs on hypocrisy and the market on greed. This is not all together accurate. I make these claims in part because they are counter intuitive. It is a cute idea that two of the central institutions of Western Civilization somewhat magically turn vices into virtue, spinning straw into gold, making two silk purses out of two proverbial sows ears.

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 at least in the past 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 families.

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 or even purely self-interested. 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.

Goods vs. Bads

There is a logic to this division of labor between democracy and the market. The market produces goods, which are as the name implies good. We want goods to be produced efficiently.

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.

Index to Western Institutions, Democracy, Freedom, Market, & Empiricism

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Last updated March 12, 2020

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Index to Western Institutions, Democracy, Freedom, Market, & Empiricism

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