Why Gordon Gekko Got it Wrong: Michael Shermer and Evolutionary Economics

“Greed is Good” – Michael Douglas as the corporate vulture Gordon Gekko in Oliver Stone’s “Wall Street”

The scene is certainly an unforgettable one. Gordon Gekko, the notorious Wall Street corporate vulture, stands in front of a shareholder meeting playing Robin Hood to the unsuspecting people in attendance as he confronts the executives of the company and pulls off a hostile takeover by appealing to peoples’ baser instincts when explaining that “greed is good”.

Although Gekko was meant to represent the cutthroat corporate culture of America in the high-flying 80s, many took his philosophy to heart. The argument went that man’s selfishness is what has propelled human invention and evolution. But is that the case?

Michael Shermer, writer, historian, and founder of The Skeptics Society tells us that this argument is in fact completely wrong. Read the interview with Michael Shermer here. Here’s a sample:

Why, if capitalism is so great, did the Enron scandal occur? Some have suggested that it was a few bad apples in the corporation.

The “bad apples” theory doesn’t explain what really happened at Enron, and it doesn’t explain the nature of corporate evil. Jeff Skilling, the CEO of Enron, set up what he thought was a Darwinian marketing environment. Skilling was a fan of Richard Dawkins’s important book The Selfish Gene, which Skilling misread. He took it to mean that evolution is driven by cutthroat competition and self-centered egotism. He liked the notion of the “survival of the fittest.” Skilling set up a Peer Review Committee, which became known as “rank and yank.” Everybody was ranked on a scale of one to five, and 20 percent of all fives had to be fired. The reviews were posted on a company website with a picture of the employee, increasing the potential for personal humiliation. Good luck being able to go out and have some fun with your teammates. Teammates! These are people who may be taking my job. Once you set up an environment like that, people begin violating rules. Skilling’s evaluation system led to a lot of behind-the-scenes wheeling and back-door dealing between department heads and managers, swapping review evaluation points. In addition to his belief in an outdated and untenable doctrine of social Darwinism, Skilling was a high-risk taker — short on dopamine, we might conjecture. What causes corporate corruption is an environment of evil established by the founders, corporate executives, and managers — a corporate psychology — that creates situations that encourage our hearts of darkness to beat faster.