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Chapter Six: Is Greed Good? Advancing Society through
Selfish Action
Learning Objectives of Chapter Six
2.
4. Discuss the role and limits of government on consequentialist business ethics.
5. Explain why the moral premise of pursuing self-interest is false.
SUMMARY: Chapter Six discusses the idea of greed in the consequentialist view.
cooperation and commitment problems. The chapter generally breaks down the major
reasoning for disproving the empirical and moral premise, including addressing
externalities, information problems, and the role of government.
Introduction
The argument on behalf of greed is that when everyone aims for their own, self-
interested advantage, the combination of all of their actions put together creates the
best outcomes for society.
Moral premise (consequentialism): We ought to choose the actions that
produce the best effects for society.
As If By An Invisible Hand
Adam Smith, the father of economic science explained the paradox of self-
interested action advancing the common interests of society
In a free market, people need no other motivation to enter into Pareto-
improving transactions than their own self-interest.
Why The Empirical Premise Is Often False
Externalities
Externalities: the effects of a production process on the well-
parties who did not agree to the transaction. (ex. pollution)
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Information Problems
Cooperation and Commitment Problems
Economist Robert Frank asserts that firms can actually do better when they have
goals outside of profits alone.
both cooperative and noncooperative actions as possible options. Both parties
The Role of Government
An empirical counterclaim supporting the invisible hand of the market is that
governments can mitigate each of the above situations. (ex. taxes, subsidies,
regulations)
The moral counterclaim is that not only can the government address these problems,
it should.
Why The Moral Premise Is False
social wealth, or utilitarian optimum.
Something can be Pareto-efficient but not do much moral good. It is not
premised on morality.