The unintended emergence of a greed-led economic system

Abstract

Purpose This paper aims to propose a new model of economic behaviour in which activities are led by greed rather than by the traditional formal rules of capitalism. Design/methodology/approach This paper relies on the empirical observation of bad practices that developed in synchrony during the collapse of the former communist economic system and the rise of global financial capitalism. Both were fuelled by greedy behaviour of asset grabbing, and paved the way to an emerging greed-led economic system. Findings First, microeconomic individual greedy behaviours that drive asset grabbing are identified, such as rigged or corrupt privatisation drives, subprime mortgage loans, Ponzi schemes, lending to insolvent clients, bad loan securitisation, stock options, fraudulent accounting and online betting on fixed matches. Then systematic changes in the traditional formal rules of capitalism that favour those having adopted a greedy strategy are pointed at; greedy behaviour is institutionalised when these capture the state and successfully lobby for rules change. Contrary to capitalism, systemic greed uses asset grabbing, instead of capital accumulation, as its major means for wealth maximisation without constraint, in a winner-take-all economy beneficial to oligarchs. Research limitations/implications The implications of this new systemic behaviour have implications for further economic modelling. Practical implications The emergence of systemic greed will have implications for the design of regulatory systems. Originality/value This paper proposes that a greed-controlled economy is replacing the traditional capitalist economy.