Ekonoclastia

Economic History of Greed

It is difficult to say what came first: was it greed or was it capital? According to most credited historians, greed lays at the core of the original capital accumulation, dating back to the XVth and XVIth centuries. Even though there is much evidence  that greed is an element shared equally throughout history, my first experience of it dates back to the early 90’s, when I was a child at primary school.

In my parents’ house, in the living room, there had always been an iron container sitting on a table. It was full of useless, everyday objects, that no one cared about. In particular, this iron pot contained the change that my father or my mother sometimes threw out of their pockets, coming back home from shopping. I was craving that small amount of coins just to experience the sensation of owning some money. Was it greed?

One day, my mother heard me lifting the lid of the container. She kept watching me closely, undetected, and opportunely showed up, catching me red-handed. Asked to explain why, I explained that I was taking the coins in the iron pot without asking permission because I was attracted by money, such a mysterious and magical object.

Money possesses a particular aura that reverberates from every single aspect of its place in society. Rich people have plenty of money. It attracts more money and, in turn, opens up richer investment opportunities and yields. After a certain level, it is hard to say what came first: was it money or was it wealth? But, how did money come to acquire such power?

One thing is clear: greed does not explain money accumulation. It seems to me that money simply accrues after a critical level is reached. Above a certain threshold, a given amount of money ceases to represent simply a sum of coins and banknotes and begins to live as capital. Then the life of capital is detached from the life of the single currency, the coins and banknotes that add up to make it. Capital opens the doors to investments, creating its own opportunities and standing as an endless reserve of value.

Does it prove that greed came before capital? I would affirm the contrary! People saved some money simply to afford the expenses of an elderly life in the future. If this is the case, who accumulates money is acting out of prudence rather than of greed.

What actually makes greed follow capital accumulation is the money holder’s intent to reinvest it in order to preserve the value of capital itself. The beginning of financial speculation is the moment when capital is held simply in order to continuously invest it in high-yield assets. This way capitals are processed as raw material feeding an industrial process that produces nothing but “yield”, accumulating a certain amount of money and investing it in rich ventures. This is what banks do and, to a certain extent, everyone is expected to do.

I confess, I can hardly say when good  behavior is at work or, on the contrary, greed is at work to extract value out of nothing.

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