People are generally more comfortable circulating a dirty joke than taking credit for it, which may explain why one of my favorites is variously attributed to Mark Twain, Winston Churchill, George Bernard Shaw, and Groucho Marx. While there is no authoritative version, the joke runs more or less as follows:
Old Rogue: Would you sleep with me for $10 million?
Starlet: Why, of course I would!
Old Rogue: How about $15?
Starlet: Fifteen dollars! What do you think I am?
Old Rogue: We’ve already established what you are, Madame. Now we’re just haggling over the price.
What I like about this joke—beyond the withering rejoinder—is what it teaches us about ethics, namely that the decisions we make are shaped by not only a wide variety of interests but the fickle relationship between them.
The moral status of motives, especially when they are classified under the heading “self-interest,” tends to prickle the conscience of even the most cocksure corporate executive. Such hesitation is hardly surprising. Self-interest has had a discomfiting relationship to economic development since the early 18th century, when Bernard Mandeville published The Fable of the Bees; Or, Private Vices, Public Benefits, an allegory implying that the common good came about when businessmen behaved badly.
Mandeville’s cynical views about human nature made him the bête noire of Adam Smith, who struggled to distance his economic system from one that implied the wealth of a nation depended upon a license for depravity. As a matter of moral retort, his greatest success was to take the debate about the relationship between opulence and ethics beyond a stale showdown between selfishness and altruism.
Contrary to how it is sometimes treated by cheerleaders of capitalism, the money motive hardly explains every action in the commercial sphere.
As Smith understood, what constitutes self-interest is actually a swarm of contending motives: the concern for security and self-advancement, the lust for power, the pride of completed projects, the pleasure of esteem, the desire for friendship and love, the satisfaction of righteous action and worldly improvement, the delights of recreation and physical gratification, and the need for rest. This catalog is by no means complete, but it indicates a more complex portrait of human motivation than Mandeville ever allowed. More importantly, while Smith agreed that allowing people to pursue their own private concerns was a better recipe for general affluence than the benevolent efforts of central planners, he also knew that to say as much was to say very little about the wide variety of motives that move us, or whether they might include broadly benign aims. (That’s a matter that hardly requires prolonged reflection, unless you believe that the interests of most people exclude the health and welfare of others.)
Ultimately, it is the role of one interest in particular, rather than a concern for whether we should ever be moved by the lives of others, that remains vexing to those who worry about the relationship between economic development and moral reasoning: the money motive.
Contrary to how it is sometimes treated by cheerleaders and critics of capitalism alike, the money motive hardly explains every action in the commercial sphere. Consider the “operating decisions” an owner-manager makes, courtesy of the economists Michael Jensen and William Meckling. They include:
. . . not only the benefits he derives from pecuniary returns but also the utility generated by various non-pecuniary aspects of his entrepreneurial activities such as the physical appointments of the office, the attractiveness of the secretarial staff, the level of employee discipline, the kind and amount of charitable contributions, personal relations (“love,” “respect,” etc.) with employees, a larger than optimal computer to play with, purchase of production inputs from friends, etc.
If the list seems quaint, or even a little retrograde, that is because it is drawn from a landmark 1976 paper in which Jensen and Meckling proposed that the misaligned incentives between owners and managers of publicly held companies could be best addressed by better tying executive compensation to firm performance. Indeed, as the duo would contend in a later paper, while “monetary incentives are not the best way to motivate every action,” ultimately “they are required precisely because people are motivated by things other than money.” As Wall Street CEOs well know, if stock options can’t replace sleep, they can make sleepless nights for a young banker not merely bearable but actually welcome.
Jensen and Meckling’s chief insight is not that only money matters, but that it is most effective, organizationally speaking, when money is made to only matter. This might be achieved in two ways. The first is when money becomes an end in itself. That possibility is the one that has most often worried moral philosophers and moralizing economists alike. John Maynard Keynes memorably imagined that one day,
the love of money as a possession—as distinguished from the love of money as a means to the enjoyments and realities of life—will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.
Whatever one makes of such outrage, it can’t be doubted that our environments can produce strange and bizarre beliefs, among them the conviction that money is the exclusive measuring stick of meaning and accomplishment. And while those disposed to such a mind-set are certainly morbid, if not necessarily semi-criminal, they seem marginal figures whose moral significance is easily quarantined.
A second way in which money might only matter is far more troubling, however, largely because it implicates the unconvinced by contaminating the many things that make up our self-interest.
If money can command all goods, material and nonmaterial alike, it may be said that only money matters.
Consider how Jensen and Meckling defend the role of monetary incentives in their vision of the corporation: “The main advantages of monetary incentives in this mosaic of organizational incentives is that general purchasing power is valued by almost everyone (because it is a claim on all resources), and it can be easily varied with performance.” This claim seems logically compelling and largely unobjectionable, unless one takes a more expansive view of what constitutes “all resources.”
Contemporary philosophers, including Michael Walzer and the late John Rawls, have spent considerable time contemplating the types of things we tend to want (the constituent parts of our self-interest) and how exactly we should get them. This is to say, they have been preoccupied with justice, an inquiry in large part devoted to the allocation of goods. For those unfamiliar with these debates, the term “goods” can be a bit confusing, for it tends to include, but is hardly limited to, material things. Rawls, for instance, held that there were a wide variety of goods that all individuals are assumed to want: “rights, liberties, and opportunities, income and wealth, and the social bases of self-respect.” Whatever one makes of this particular taxonomy—and among philosophers it by no means commands universal assent—the important point is that there are different types of goods we desire as well as various ways in which we generally believe they ought to be allocated. If Michael Phelps sets a world record in the 200-meter medley, he may be fairly entitled to an Olympic gold medal, but not admission to Harvard Medical School.
This is why Jensen and Meckling’s observation about the “main advantages of monetary incentives” is worth lingering over, for it is obviously the case that the more goods money may command, the more compelling such incentives will be on one’s behavior. And if money can command all goods, material and nonmaterial alike, it may be said, in a different sense from the morbid individual above, that only money matters.
To be sure, it is hardly a profound insight that the goods supplied by great wealth are not limited to material things, to say nothing of ease and comfort, and for anyone who has ever marveled at friends who spend an awful lot of time opening up homes for some fugitive “season,” even the latter relationship seems dubious. Smith, himself, was skeptical. He called the belief that the “pleasures of wealth and greatness” are “well worth all the toil and anxiety” we bestow on them the great “deception” that “keeps in continual motion the industry of mankind.” While such strenuous efforts benefited the broader public, Smith steadfastly maintained that the work of superintending an “economy of greatness” was more of a burden to the wealthy merchant (however well fed and richly attired he might be) than a clear and present blessing.
Smith’s conclusion had much to do with the modest universe of material things that were available to even the wealthiest merchant in 18th century—most of which he dismissed as “baubles and trinkets”—but it was also a reflection of the fact that, in the hierarchical world Smith knew, the nonmaterial goods one might want to buy were still highly circumscribed by aristocratic privilege. Writing 50 years after Smith’s passing and long after the Industrial Revolution had kicked into high gear, Karl Marx concluded that the forces of capitalism, once unleashed, had a tendency to expand the purchasing power of money by effectively putting a price on everything. The agents of industrial development, he famously said, have “drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation,” with the result that there remains “no other nexus between man and man than naked self-interest, than callous ‘cash payment.’”
Notably, such reflections put Marx in league with Jensen and Meckling. On the one hand, a publicly traded company for them is ultimately no more than “the nexus of a set of contracting relationships among individuals,” a contention that obviates “the personalization of the firm implied by asking questions such as ‘what should be the objective function of the firm,’ or ‘does the firm have a social responsibility’” (an exercise in philistine sentimentalism if ever there were one). On the other hand, this essentialist approach simplifies a company’s incentive structure by making “cash payment” (callous or otherwise) the exclusive mechanism.
For Marx, Jensen, and Meckling alike, the money motive is capitalism’s most expedient instrument for shaping human behavior in favor of economic efficiency; but the power of that motive depends entirely on the universe of goods that money might command. If it can only buy “baubles and trinkets,” it can hardly be inclusive of self-interest in its entirety. To be absolutely potent, it must be able to purchase a wider array of nonmaterial things we desire, such as honor, dignity, preference, respect, opportunity, privilege, and power.
This possibility was welcomed by Marx as an omen of capitalism’s undoing, but it has unnerved others. In Spheres of Justice, Walzer championed what he called “a diversity of distributive criteria that mirrors the diversity of social goods.” For Walzer, these criteria were largely determined by commonly held opinions about merit—again, what entitles one to a gold medal as opposed to medical-school admission—and the real threat to justice, as he saw it, came not from the monopoly of a single good, but from the possibility that any good could become a powerful claim on others. “Tyranny,” said Walzer, citing Blaise Pascal, “is the wish to obtain by one means what can only be had by another.” As such, “The following statements, therefore, are false and tyrannical: ‘Because I am handsome, so I should command respect.’ ‘I am strong, therefore men should love me.’”
If you exchange “wealthy” in those statements for “handsome” or “strong,” Walzer would contend that you are describing an allocative logic that is manifestly unjust. Whatever one makes of this argument, it obviously doesn’t hold great sway under capitalism; nor is it entirely clear how, in a free society, we might prevent the buying and selling of so many goods that seem unlikely items for an auction block. That said, such difficulties are certainly conducive to economic efficiency, for the greater the world of goods that money might command, the more powerful the money motive becomes precisely because it comes closer to satisfying all of the desires that make up our self-interest.
Before we get too busy patting ourselves on the back for the boon to productivity, we might consider the broader consequences of this trend for moral deliberation, not to mention our capacity for humor. Take the joke that I began with. If there isn’t any taboo around the buying or selling of carnal knowledge, the joke isn’t dirty. In fact, if all the Old Rogue and the Starlet are doing is haggling over the price, it isn’t even a joke at all. When the role of money in such matters is unabashed, the very nature of the bargain changes.
The same holds true for all sorts of goods. Being able to buy an Olympic gold medal, medical-school admission, or a midnight rendezvous changes the meaning of honor, opportunity, and love—and the way we go about pursuing them. In such a world, it could certainly be said that only money matters because money could satisfy our self-interest in its entirety; but if the goods we crave are a reflection of who we are and what we value, one could be forgiven for wondering whether the achievement is ultimately worth the trouble.
John Paul Rollert is adjunct assistant professor of behavioral science at Chicago Booth.