Take a Hard Look at the Money Motive

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.