If you are considering becoming a 1M/1M premium member and would like to join our mailing list to receive ongoing information, please sign up here.

Subscribe to our Feed

Capitalism 2.0: Is Integrity Implicit?

Posted on Saturday, Mar 28th 2009

As we explore capitalism as a philosophy and a system of thought, I feel that one of the biggest fallacies in our assumption so far has been to expect that integrity is implicit. It is not.

Here’s what John Galt has to say as a definition of integrity: “Integrity is the recognition of the fact that you cannot fake your consciousness, just as honesty is the recognition of the fact that you cannot fake existence—that man is an indivisible entity, an integrated unit of two attributes: of matter and consciousness, and that he may permit no breach between body and mind, between action and thought, between his life and his convictions—that, like a judge impervious to public opinion, he may not sacrifice his convictions to the wishes of others, be it the whole of mankind shouting pleas or threats against him—that courage and confidence are practical necessities, that courage is the practical form of being true to existence, of being true to truth, and confidence is the practical form of being true to one’s own consciousness.”

Very well, except, the “man” he describes above is an ideal man. How many ideal men do we know? The world we inhabit is littered with men and women who live their entire lives in fragmented, liminal states, straddled between their values and their actions as they oppose each other.

Barnie Madoff may be an extreme case of the fragmentation between values and actions, but to smaller degrees, a much larger set of people lack integrity.

How can we, therefore, build a system and expect it to function perfectly given that the system assumes that integrity is implicit?

This segment is a part in the series : Capitalism 2.0

Hacker News
() Comments

Featured Videos


Good question. Just as much traditional political science assumed that individuals ALWAYS want to participate (they don’t) and traditional economics assumed perfectly rational behavior (bounded rationality is probably more like it), when contemplating our systems in many cases we (the designers and participants) may need to update our notions of ‘human nature.’

Certainly the system needs to account for an updated notion of humans, and with regard to integrity, it needs to both reward integrity overtly while also implicitly supporting daily integrity (some research suggests that ‘paying’ people for altruistic behavior actually interferes with their inherent tendencies for such behavior).

We might starting with asking, in daily lives around the world, when do we see ‘integrity’ manifest without prompting? Why do we think it happens then? And then begin to compare/contrast with the relationships and incentives we recognize in daily capitalist life.

Richard Lum Monday, March 30, 2009 at 11:08 AM PT

A capitalist system is an economic version of the survival of the fittest. As you alluded, there is an assumption that integrity is implicit within each citizen. The recent crisis has shown that the only virtue that is implicit within all citizens is greed, Mr. Madoff being the extreme example. We must now start to debug the system, as we learn from our mistakes. The credit rating agencies, such as Moody’s and Standard & Poor’s, were not acting with integrity. They were stuck in a conflict of interest. Would anyone bite the hand that feeds you? No. A stellar rating on the recent offering increased the likelihood it would be picked to rate the next offering. A solution must be sought in the form of regulation because the people behind those companies have not made a change. Regulation is only necessary in places where the system is not self-correcting to insure the integrity of the system.

Jordan Cole Tuesday, June 30, 2009 at 8:27 PM PT

Since when did the system assume integrity is implicit? Formal economic practice is predicated on the concept of Judge Holmes’ “bad man” – a man or woman who always acts in their own best interest, regardless of any moral constraint. Hence why economics has been dubbed the “dismal science”. We, as humans, will always do that which maximizes our own utility.

I too am an entrepreneur, and I too respect the work of Ayn Rand. Growing up, however, I was more impressed with the work of Joseph Conrad’s “Heart of Darkness”. As opposed to Rand’s “rational moral code”, which presupposes humans will choose to act morally, Conrad reveals the primal darkness lurking in the nature of every “civilized” human. Conrad presupposes human nature is fundamentally amoral and hedonistic. Civilization becomes a fragile veneer created by mankind to counterbalance the darkness we fear within ourselves.

Capitalism’s greatest attribute is its ability to harness hedonism (“unbridled greed”) to create social surplus. Per Adam Smith’s foundational work in “Wealth of Nations”, economic man “neither intends to promote the public interest, nor knows how much he is promoting it. … he intends only his own gain … led by an invisible hand to promote an end which was no part of his intention.”

Traditionally, the government’s role has been to step in when there is a private market failure (monopoly, externality, etc), but what happens when there is a regulatory failure? The system hiccups, we figure out what went wrong and the laws slowly but surely adapt to meet society’s needs. Of course those hiccups can be pretty rough (anybody remember the French Revolution?), but over the course of history capitalism propels us forward. The best thing we can do for the system is to lookout for ourselves.

Jake Bergmann Saturday, November 14, 2009 at 1:23 PM PT