'Greed is good' explains capitalism as it actually operates, not as the textbooks tell you it operates

'Wall Street's' corporate raider Gordon Gekko is the bad guy in the movie, but there's a reason he was so popular

Gordon Gekko, the corporate raider in Oliver Stone’s Wall Street, gets up at a smoke-filled shareholder meeting for Teldar Paper (yes, kids, back in the day you could smoke indoors and companies that made paper were important), struts around the room in his dark suit and slicked-back hair, and just lays into management. The company is bloated, slow, and losing money. The managers up on the podium are incompetent and they need to get out of the way. Now. And it’s not just a problem with this company, he insinuates. It’s America itself. The country has lost its compass, more content with managing what it’s got than innovating, creating, leading. It’s a charismatic speech, Gekko playing to the crowd, his fellow shareholders. This crappy management group is costing them money, he tells them, but he has a plan. And what is the point of that plan? Well, you know what it is.

“The point is, ladies and gentlemen, that greed – for lack of a better word – is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.” What he’s saying to them is that greed - something normally you’d think of as bad - is actually good because all of them individually being greedy ultimately will push the company to operate better. Being greedy makes you hungry, makes you work hard, makes you do anything to succeed. This is how greed works. That same idea, Gekko says, can save “that other malfunctioning corporation,” meaning the United States. Bang! It’s a mic-drop moment. Gekko’s diatribe is a great speech, well-written, tight, and delivered perfectly by Michael Douglas, who beat out William Hurt, Robin Williams, and Jack Nicholson for an Oscar.

It’s also total horseshit. Gekko doesn’t want to save Teldar Paper. Gekko doesn’t care about Teldar Paper, or the shareholders. He wants to load up the company with debt, take a huge payday for himself, and let whatever happens after that happen. Gordon Gekko has one goal: to get money for himself, and more money, and more money after that, and revel in everything it can buy him. Ocean-front property. Private Jets. Mobile phones (that was a real luxury item in 1987). He will destroy Teldar Paper to get it. He will destroy Blue Star Airlines, the company where Bud Fox’s father works, which Bud stupidly serves up on a silver platter for Gekko. Gordon Gekko worships at the altar of the Almightier – the altar of money. He is a ruthless adherent of the faith.

You’re saying, pfft, it’s just a movie. And you’re right. It is just a movie (and a lot of that movie hasn’t aged well, like Bud’s gaudy 1980s-style apartment). But there’s nothing fake about that greed line. It’s adapted from a real speech given by a real corporate raider, Ivan Boesky, who brought up the topic of greed when he gave the commencement speech at the University of California Berkeley’s business school in 1986. “Greed is all right, by the way,” Boesky told the next generation of business leaders. “I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself.” The next generation of business leaders laughed and cheered the line. Gekko the movie villain was a mash-up of a bunch of real Wall Street guys who made fortunes in the ‘80s, guys like Boesky and Michael Milken. These corporate raiders became celebrities in their own right, famous for their ability to spin money out of thin air, splashed on the covers of magazines. They had unlocked some key to a new kind of riches and they were lionized for it. They were rain makers. Everybody wanted to know their secret. Boesky was telling the next generation what it was, but like Gekko he told them only half the story.

Their secret was pretty simple: spurred by their own insatiable greed, they were cheating. You can make a lot of money playing by the rules on Wall Street. You can make even more playing outside the rules. If you think of money as an incentive system, then the Street offers one huge incentive to cheat, and operators like Boesky and Milken have always been accepted with a wink and a knowing nod. Thirty years after Wall Street premiered, Michael Douglas was shocked at how many people told him they went to the real Wall Street because of his character. “It’s always made me a little disturbed that people just loved that character as much as they did,” he said.

In the decades since Ivan Boesky ruled Wall Street greed has become only more ingrained. The prevailing ethos of corporate America for the last 40 some-odd years has been that whatever produced the best returns for shareholders was the only thing a corporation should do. Shipping jobs overseas. Consolidating and firing “redundant” employees. Selling shoddy products. Making a fourth Matrix movie. Anything can be justified when the goal is maximizing profits. And let’s be clear here, this isn’t just about dunking on Wall Street. Everybody from grocery store clerks to Jeff Bezos is driven by the same thing. Me, too. It’s not like I’m giving my book away. The entire thing is deeply ingrained in our collective consciousness.

When I started writing The Almightier I was reminded of an incident that shows just how deeply ingrained it is.

One morning in the fall of 1987, my college buddies and myself were having breakfast in the cafeteria (after another night of heavy drinking) when a man approached and asked if he could sit. He was a writer named Paul Loeb doing research on college students, and wanted to ask us some questions. We talked for a while, and then invited him back to our dorm. We parked him in one of the lounges and let him direct the conversation. People came and went, and it lasted the entire day and into the night. Years later the book, Generation at the Crossroads, was published. Chapter one opened with my friends and I debating whether it was better to look out for yourself or care about others. (Loeb gave us all the option of using our real names or pseudonyms. I - described as an ambivalent, aspiring writer - was the only one who ended up letting him use my real name.) It wasn’t even really a debate; virtually all of us believed the former.

What’s clear in looking at the book now, beyond the fact that Loeb was presciently trying to define Generation X before anyone even called it that, is how thoroughly we had absorbed the message that greed is good. The way that you help others, we said, is by helping yourself first. Make money for yourself, secure your own wealth and future, and then you can give back to society. “Helping people is great,” one of my friends said, “but you can’t help everyone else and throw away Number One.” Where’d we get that idea from? None of us had heard Ivan Boesky’s commencement speech; these were the pre-internet days. We hadn’t seen Wall Street, either. The day Loeb spent with us was in the fall of 1987, the movie premiered in December that year. But there we were, a bunch of slacker Gen Xers, just kids, really, unconsciously parroting an argument about selfishness.

To a degree, it was just the zeitgeist. Boesky and his corporate raiders were already part of the culture, and Wall Street was getting made because it reflected that. But the reality is, the idea goes back much, much farther than Boesky. Six hundred years ago, in a Europe ravaged by the Black Death, a radical idea started circulating: greed is good. I’m not kidding. It was whispered by bankers, it was debated by writers, it was eventually embraced by Popes. An Italian named Poggio Bracciolini was the first to utter it openly: “Avarice, sometimes, is beneficial,” he wrote. Even the cadence matches Gekko’s speech. The man is totally largely forgotten, but the idea he espoused would become the dominant belief system of the western world. Within a century, it would completely transform Europe from a decrepit global backwater to a world power.

The reality is Bracciolini’s radical idea about avarice became the cornerstone of capitalism and Europe’s emergence from a millennium-long funk and transformation into a world power. “Greed is good” explains capitalism as it actually operates, not as the textbooks tell you it operates. Capitalism didn’t create greed. Greed created capitalism.

If you want to hear more about Bracciolini and greed’s transformation from the root of all evil to a civic virtue, the story and more is in my new book, The Almightier: How Money Became God, Greed Became Virtue, and Debt Became Sin. It comes out July 22, and you can order it online today.