How To Recover Our Respect For The Finance Industry
Excerpt adapted from “In Pursuit of Wealth: The Moral Case for Finance” (ARI Press, 2017).
Available for purchase HERE
Part 2 (Read Part 1 HERE)
This points to why Ayn Rand’s philosophy of Objectivism is indispensable for understanding and defending the morality of finance. If you assume that the profit motive necessarily encourages predatory exploitation, and that self-interest per se is immoral, then at best you will see finance as a necessary evil and tend to see any problem or injustice associated with finance as a reflection of its inherent immorality.
Rand’s philosophy, however, challenges those assumptions, first and foremost by questioning the conventional understanding of self-interest. Whereas we are taught to equate self-interest with short-range desires for things like wealth, power, and prestige, and morality as a guide for tempering our selfish desires for the sake of others; Rand encourages us to look more carefully at what our self-interest actually consists of. Human beings thrive, she argues, not through the short-range, predatory pursuit of our desires, but through living a life committed to the ideals of reason, productive achievement, and the trader principle—seeking to gain values from others through mutually beneficial trade.
This conception of self-interest, which she calls rational selfishness, leads to an understanding of the profit motive diametrically at odds with the conventional one. Profit is the economic insignia of production: one profits by creating value—and the motive of those seeking profits is to earn wealth by creating value. It is a selfish motive, yes—in the sense that the pursuit of one’s own happiness is inherently selfish. But it has nothing to do with the short-range, predatory motives that drive cons, crooks, or even the “get rich quick” types who stay within the bounds of the law but have no genuine interest in productive enrichment. The symbol of the profit motive is Steve Jobs—not Bernie Madoff.
In Rand’s view, the man who profits through productive achievement is doing something moral. He is supporting his own existence and pursuing his own happiness by using his mind to create values—the values that human beings need to live and enjoy life. And this is as true for bankers, traders, and investors as for any other producer. They use their minds to create wealth—not by taking existing materials and turning them into more valuable goods, but by taking existing wealth and putting it toward more valuable uses. In short, financiers don’t create the products that enrich our lives—they help create (and nurture) all of the businesses that create the products that enrich our lives.
In our new book In Pursuit of Wealth: The Moral Case for Finance, we dispel some of the most important myths that prevent people from reaching a proper evaluation of finance, and lay out the moral framework necessary to grasp the industry’s virtues. A key takeaway from this book is that to counter the vilification of financiers requires moral reframing. Those who recognize the irreplaceable value of finance must change the terms of the debate. The question should not be whether financiers are “greedy” or selfish or motivated by money. The question should be: do they profit through creating values that enhance human well-being—or are they parasites who line their pockets through short-range gambling and predatory exploitation? If we ask that question—and if we answer it honestly—then the moral case for finance is undeniable.