“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.” F. Scott Fitzgerald, The Rich Boy
“The rich were dull and they drank too much, or they played too much backgammon. They were dull and they were repetitious. He remembered poor Scott Fitzgerald and his romantic awe of them and how he had started a story once that began, ‘The very rich are different from you and me.’ And how someone had said to Scott, Yes, they have more money. But that was not humorous to Scott. He thought they were a special glamorous race… ”Ernest Hemingway, Esquire, August 1936
Bernard Mandeville isn’t read much these days. My first encounter with his famous epitome The Fable of the Bees or Private Vices, Publick Benefits was as a young economics student. His idea was scandalous at the time he wrote it because it went against the prevailing Christian theology but we do not flinch today when similar ideas dominate the MAGA revolution in America. Adam Smith’s “invisible hand” philosophy, perverted and parroted by today’s uber rich has been transformed into prosperity Christianity, a celebration of great wealth and the power that goes along with it.
Jonathan Swift’s A Modest Proposal, another less read satire in these click and go days, was a wonderful parody of Mandeville. Mandeville argued that the vices of the rich supported the poor by giving them jobs (Oyez! Oyez! Ye salt of the earth.) Swift pointed out (tongue in cheek) that the poor might lift themselves out of poverty by selling their surplus babies (God made so many you know) to the rich who could stew them for dinner.
Today’s oligarchs, tech bros, Real Housewives of Mar-a-Lago and other assorted Magatons are more subtle but equally effusive in their defense of capitalism’s tough love. They often cite the absent-minded philosopher Adam Smith, a reclusive bachelor who got lost on long walks while deep in thought (speech writers today call it “the weave”), as the source of the free enterprise system which they publicly espouse but privately disdain. Because, who really wants competition?
Of course, they haven’t read their Adam Smith any more than Mandeville or Swift. The same Adam Smith who wrote The Wealth of Nations also wrote The Theory of Moral Sentiments where he made it very clear that the self interest that guides a free and open economy is not the same thing as greed regardless of Gordon Gekko’s pronouncement that “greed is good” or Bernie Madoff’s rationalization that “what I was doing was OK, that it wasn’t going to hurt anybody.”
The best argument for “free enterprise capitalism” is that it’s a trading mechanism that’s a “win-win” situation. However, for the “win-win” to take effect certain assumptions are made: perfect competition, complete information and no negative impacts not reflected in prices (i.e. no externalities in economics lingo). And, equally important are the “laws of justice” or “rules of the game,” basic ethical standards that are assumed to be true by the market participants.
Market exchange, or trade, implicitly assumes that participants adhere to several ethical principles, namely imperatives not to steal, lie, or to commit or threaten violence against others. Stated in positive terms, market participants are expected to honor property rights, to be honest, and to be kind to others. These are all elements of cooperation. When these principles are shared and adhered to by market participants, then markets can thrive and deliver the economic efficiency described in the models. However, when participants do not adhere to these ethical principles, we can say the market has imperfections, or instead, that there is market failure, the ultimate result being economic inefficiencies. (Distinguishing Self-Interest From Greed: Ethical Constraints and Economic Efficiency, Steven Suranovic)
Nobel laureate Joseph Stiglitz puts it this way:
“We used to think that high profits were a sign of the successful working of the American economy, a better product, a better service. But now we know that higher profits can arise from a better way of exploiting consumers, a better way of price discrimination, extracting consumer surplus, the main effect of which is to redistribute income from consumers to our new super-wealthy.”
Bernard Mandeville pointed out a fact that appeals to today’s rich: virtue isn’t enough for a nation to thrive; a nation must be free to pursue material gain just a freely as it pursues honesty. A free market, even with its imperfections is necessary for prosperity. But even Mandeville understood that human nature, so prone to greed and fear, must be constrained:
They were not Slaves to Tyranny nor ruled by wild Democracy; But Kings, that could not wrong, because Their Power was circumscribed by Laws.
Some eight years ago Myron Magnet speculated in a Mandevillean way that “Trump’s character flaws might yield constructive ends.” (See Vanity in the Service of the Public Interest). The idea is that the narcissism and hunger for the limelight and celebrity, the vanity and concern for his legacy might actually lead to the Golden Age that Mr. MAGA portends. Well, in the last two months I think we’ve got our answer. Thus far, The Man Who Would Be King is more Danny Dravot than George Washington. America is burdened with all the costs and none of the proposed benefits and this seems likely to be the case going forward.
Historians will remember the current period of geopolitical turmoil as the moment Western nations lost trust in the U.S. according to Sir Richard Branson (Fortune, March 31, 2025)
The rich men (Elon Musk, Mark Zuckerberg and Jeff Bezos) have kissed the ring choosing greed over enlightened self interest. Major entertainment companies (Disney, Amazon, and Paramount) have “caved in the face of Trump bulling”Luckily there are some rich women who understand where Mandeville was wrong and where Adam Smith was right: Laurene Powell Jobs, Melinda Gates and Mackenzie Scott. (See In Praise of Laurene Powell Jobs, Owner of The Atlantic, Hero of Signalgate).
In America’s avowed “masculinity crisis” it takes a woman to lead the way to prosperity. That may be a topic for a future blog!