Three useful things to know about greed and misconduct

At its worst, it's an insatiable desire for more of what cannot satisfy

The Interim Report of Australia's Hayne Royal Commission blamed the misconduct in the financial sector on greed. This struck a chord with Anthony Asher, an associate professor in the school of risk and actuarial studies at UNSW Business School, and an actuary well known for his interest in ethics in professional life. 

He began to reflect on how the personal motivation of greed works its way into structures and behaviour that we feel is repugnant to 'community standards'.

From what he found, greed can be seen as more than self-interest, even self-interest pushed to extremes. It is desiring not only more than is necessary, but more than can be enjoyed.

Here, he offers some useful insights.

Economic rents

“In the economy, greed results in overcharging, over-servicing and, in the extreme cases, the reckless pursuit of gain. In technical terms, it is the pursuit of 'economic rents',” Asher says. 

“We can readily see that greedy people can extract economic rents in markets that may otherwise appear to be free. 

“Producers of goods and service can do this by deceit, by creating monopolies that give other parties no choices, and by various psychological manipulations, including relying on their customers’ lack of knowledge or motivation. 

“Employers can also manipulate their staff by exploiting their vulnerability, particularly feelings of loyalty and even the desire to do a good job. 

“Allowing greed to run free in markets makes them less efficient. Perhaps the best illustration is the difference between the fixed prices in our shops and the souq markets of the Middle East, where the rules of the game require haggling over prices until one of the parties is exhausted. 

“In our economy, retail costs are small – in souq markets, it's up to half the cost of production.”

'We do not need organisational structures where a few compete aggressively to earn outrageous incomes and lord it over those they have defeated in the remuneration tournament'


Needs, desire and addictions

At its worst, some psychologists see greed as an addiction: the insatiable desire for more of what cannot satisfy, Asher says. 

“To understand, we can use Maslow’s categorisation of needs to identify our different desires: for hunger and thirst, fight or flight, belonging, achievement, esteem, cognition and transcendence. 

“Each of these has a related satisfaction: feelings of being replete, secure, loved, success, the aha of understanding, awe. 

“Recent neuroscience has given new insights to confirm what has long been believed. We can desire things that do not satisfy, the different sources of satisfaction are not interchangeable, and we can redirect our desires to those things that do satisfy. 

“The neuroscience has identified a dopaminergic system that is at the root of all our wanting, and a variety of other hormonal systems that deliver satisfaction. 

“True happiness means satisfying all our needs, not falling prey to addictions. An important role of education (and for some the role of religion) is to help train ourselves to redirect (sublimate) our desires. A critical element of this is to develop healthy and virtuous habits, which is what Aristotle advocated,” Asher says. 

Strengthening institutions

According to Asher, it is widely recognised that our actual behaviour is influenced not only by our personal desires and habits but also by the institutions of the societies in which we live.

“We can classify these institutions as culture, including our norms and ways of thinking; organisations where we relate to others; and laws and regulations. These institutions do not develop spontaneously,” he says. 

“What we can do is limited by the environment and technology, but they are also the results of creative work of many people both past and present. 

“The institutions of learning bear a responsibility for facilitating training in virtue, so that fewer people are misled into misdirected desires that do not satisfy. 

“Those of us teaching in business schools have a particular responsibility. It has been shown that some students passing though business schools have been misled into believing that greed is good for the economy rather than a pathology.

“We also need to rethink power and motivation in organisations. Monetary incentives play to dopaminergic addictions and undermine our understanding of the social purpose of organisations, misdirect our competitive nature so creating anxiety, and manipulate our desire to belong. 

“We do not need organisational structures where a few compete aggressively to earn outrageous incomes and lord it over those they have defeated in the remuneration tournament. 

“Finally, we need to rethink the rules of a number of markets. We do not need to give as much space to the addiction industries (alcohol, gambling etc). We can envisage employment markets that share risk more sensibly, and discourage overwork. 

“And we can certainly envisage economies with less financial sector over-servicing,” Asher says.


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