In order to help make clear the difference of greed and incentives, this paper will discuss a quote from Adam Smith’s book, Wealth of Nations, along with discussing innovation, the difference of acting in one’s self interest and being greedy, and fairness or greed in free market systems. Greed and incentives are two terms that each play a role in the other. Incentives are sometimes rewarding and sometimes unrewarding. Greed is taught to be a bad quality to children: but is greed really bad? By taking an economical perspective of greed and incentive, one can see how each play a vital role in the free market society.
Define Greed and Incentives Greed is a strong and selfish need for something, such as, power and wealth, with the intentions to keep it for their own self. Greed can cause people to stop at nothing to obtain what they desire most, without considering the consequences that may come along with their quest to obtain the thing they want most. Incentive is what motivates and encourages someone to do something. Incentives are used to persuade people in to doing something. For example, if you have ever purchased a kids meal just to get the toy, you purchased it with the incentive of receiving.
Incentives can be negative or positive. Negative incentives punish someone financially for making certain choices and behaving a certain way. Positive incentives, forever, reward someone financially for making certain choices or behaving in a certain way (Economic Incentives in Our Community). Greed and incentives have some similarities, such as, both are only concerned about with self-interest. They are also different, greed is the selfish desire, whereas, incentives are the motivations. Incentives are what cause people to be greedy. Adam Smith’s quote. 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. We address ourselves, not to their humanity but to their self-love, and never talk to them f our necessities but of their advantages (Smith, 21). ” This quote is a great example of how greed plays a role in our society. The butcher, the brewer, and the baker have a business to run and people to support. They do not operate just to provide goods to people, they have started their business with the intent to make money.
One could say that they are greedy and only care for their wellbeing because they are selling what they make in order to gain money. Smith is claiming that free trade among the members of a society inevitably leads to an outcome that is good for the society as a whole, even Hough each individual pursues only his own selfish gain (Buchanan). If an individual can profit by manufacturing some product or supplying some service he or she will do so. The ability to make profit proves that other members of the society must want those goods or services.
If you consider this, the society needs will be met through the pursuit of individual self- interest, or greed. The incentive to make a profit is what pushes someone to make the goods or services. Without the incentive of profits no one would provide goods or services. Discuss innovation: ‘Would humankind still be tuck in the stone age if we did not have the incentives provided by profits? ” Innovation is a driving factor in our economy. Without incentives of profit innovation would not matter. Under capitalism, Innovative activity – which in other types of economy is fortuitous and optional – becomes mandatory, a life-and-death matter for the firm. And the spread of new technology, which in other economies has proceeded at a stately pace, often requiring decades or even centuries, under capitalism is speeded up remarkably because, quite simply, time is money (Bamboo, 1). ” Without incentive provided by profit we loud not have the great country we call America. The incentive of profit is what paved the way for our free market capitalism. Is there a difference between acting in one’s self interest and being greedy?
If so what’s the difference? Is acting in one’s self interest good? Is greed good? There is no difference in acting in one’s self interest and being greedy. As stated earlier, greed is a selfish need for something and to keep it for one’s self. To answer the question; is acting in one’s self interest good, you must consider Adam Smith’s quote; “It is not from the benevolence of the butcher, the brewer, or he baker that we expect out dinner, but from their regard to their own self- interest. ” The butcher, brewer, and baker are all acting in their self-interest, which is good for them; but is it good for everyone else?
The answer must be yes, because people are willing to buy the goods or services that these people make. As mentioned earlier, free trade among the members of a society though each individual pursues only his own selfish gain. By using this for the basis of the question, yes, greed and acting in one’s self interest is good. Do the incentives of the free market promote fairness or greed? Incentives of the arrest promote both greed and fairness. According to Milton Freedman, “The world runs on individuals pursuing their separate interest. Pursuing one’s self interest is the same as greed. But when you consider history, and our economy, the only cases where people have escaped severe poverty are in nations that have free market economies. Because of the free market system, prices are set for goods and services freely by consent between sellers and consumers, fairness is achieved. But the desire for someone to start producing a good is caused by the incentives from the profits, caused by the greedy desire of wanting to make more money. Conclusions Incentive and greed play a large role in a free market society.
Without the incentive of profits people may not help grow the economy by producing goods or services. Greed is a driving factor in our economy. As Milton Freedman said, ‘ ‘The world runs on individuals pursing their separate interest. ” Adam Smith also realized that people acting out of greed would help society as a whole. Greed is what shaped the free market economy, greed is what helped America become the great nation it is today, because after all, greed is the pursuit of one’s self interest, whereas, incentives are what motivates people to become greedy. References Bamboo, W. (2002).