The last few years have seen a surprising revival of the term “greed.” For many decades, the free-market right saw no harm in people making as much money as they could, while the left spoke only of inequality and injustice, both directing their economic attention to accumulation or distribution rather than motivation. Yet it was avarice that was notably on display in the various oversights and abuses leading to the financial meltdown. The vast bonuses, the reckless gambling, the collusion of auditors and regulators”all fruits, it seemed, of that unlovely vice. Tabloid journalists led the cry, followed shortly by clerics, happy at last to be able to talk about something other than sex.

But although once again popular, the term “greed” is not yet intellectually respectable. In the eyes of mainstream economists, greedy people are simply agents with certain preferences acting on certain incentives. Joseph Stiglitz, for example, insisted a few years ago (before the crisis) that “those

who misbehaved in the corporate and financial world were not necessarily particularly venal, or more venal than those who occupied their positions in an earlier era; rather, their incentives were different, and their behavior responded to those incentives.”

If anyone is to blame for the crisis, claim the economists, it is the politicians and regulators who created those incentives, or the thinkers whose false theories inspired them. But this only pushes the problem back a step. Why did so many politicians, regulators, and economists, some of them, at least, intelligent people, accept what in retrospect look like manifestly bogus theories? Surely motives of ambition and greed were at play here too”especially given the close connection between the intellectual, political, and financial elites.

And so the argument bounces back and forth. There seems to be no easy reconciliation between the popular view of the crisis, which focuses on greed, and more “serious” discussion, which focuses on institutional design.

This incoherence in our response to the financial crisis is not an accident. We are inheritors of two traditions of thinking about wealth, which lie side by side in our minds without mingling. On the one hand, we have it on ancient and venerable authority that the love of money is the root of evil and a sure path to corruption and servitude. Western travelers to China, where cash is given in pretty red envelopes to children and burnt in effigy before graves, feel the residual force of the old occidental distaste for the “filthy lucre.”

Yet these ancient classical and Christian traditions, which dominated moral discourse about wealth for millennia, have been overlaid by another, dating back to the Enlightenment, for which wealth creation is a perfectly innocuous or even benign activity”provided it is confined within legal limits. This revolution was accompanied by another, even deeper, revolution of ethical thought, which was eventually to become known as utilitarianism. These attitudes are now ensconced in centers of political power and in the discipline of economics. They rule our thinking heads, if not our feeling hearts.

So comprehensive has been the triumph of this twin revolution that sophisticated minds today find it hard not only to see the love of money as a vice, but to see how anything like the love of money could ever have been regarded as a vice. “Greed” has been relegated along with “lust” and “perversion” to the margins of moral language, where only priests and rabble-rousers seek to rummage.

The philosophers of the eighteenth century confronted a formidable legacy of thinking on the subject of accumulation, almost all of it hostile. This hostility was based not merely on aristocratic or monkish prejudice, as is often alleged, but on the reasonable supposition that the only intrinsically valuable thing in the world is a good human life. Money, and the goods purchasable with money, have value only insofar as they are conducive to a good life. To pursue them beyond this point is irrational. Thomas Aquinas put it in the Summa Theologiae with his usual dry clarity: “The desire for material things as they are conducive to an end is natural to man. Therefore it is without fault to the extent that it is confined within the norms set by the nature of that end. Avarice exceeds these limits and is thereby sinful.” He adds that avarice “darkens the soul” by “putting love for money above love for God,” and compares it to idolatry, but these theological embellishments are not essential to his argument, which can be stated in purely secular terms.

Aquinas’ remarks on avarice summarize a long tradition of thinking on the subject, stretching back to ancient Greece. The legends of Midas, Croesus, and Erysichthon taught Greeks to see the pecuniary passion as sterile and violent. Philosophers such as Aristotle contrasted pleonexia , the restless desire for more, with autarkia , the tranquil self-sufficiency of the sage. Roman moralists swelled the theme. “Neither burning heat, nor winter, fire, sea, sword, can turn you aside from gain,” declaimed Horace to the miser in his First Satire . “Nothing stops you, until no second man be richer than yourself.”

Christian authors drew freely from this classical tradition, in particular Aristotle’s image of compound interest as a kind of monstrous birth. “Repeatedly, by the most vile cunning of usury, gold is born from gold itself,” runs Gratian’s Decretum , the foundation of Western canon law. “Never is there satisfaction; never will there be an end in sight for the greedy.” Examples might be multiplied. For pagans and Christians alike, the miser’s sin lay primarily in his insatiability, his incapacity for rest. In a society that took its measure from the eternal identity of God or the circling stars, this ceaseless striving after more seemed tantamount to a breach in the cosmic order.

Nowhere does Aquinas (or any of the authors he draws on) suggest that avarice might be redeemed by its beneficial social effects. Not only did he not perceive any such effects, but even if he had, he could not have accorded them any moral significance. Explanation of this point requires a brief excursus into Aquinas’ theory of acts and ends. An act, for Aquinas, has two ends: one “proximate,” which is what makes it the kind of act it is, the other “ultimate,” which is what the agent aims at in acting. If either end is bad, the act as a whole is bad. A good ultimate end cannot redeem a bad proximate end; thieving to help the poor is still thieving.

Acts furthermore have consequences which, though foreseen, are not ends of either kind, but mere “double” or side effects. These can sometimes render a good act bad, but never a bad act good. (Praising a little girl is kind, but less so if done in earshot of her jealous sister. Taunting a little girl is never kind, even if it warms her sister’s heart.) Finally, acts have consequences that are neither intended nor foreseen. These come under the heading of accidents, and are morally indifferent.

It should now be clear why Aquinas was uninterested in the possible benefits of avarice. If an act is of an intrinsically bad sort, then any good consequences flowing from it, whether intended, unintended but foreseen, or unintended and unforeseen, are morally irrelevant. The act is vitiated from the start; nothing can redeem it. Aquinas knew from Scripture that bad acts sometimes have good effects. If Adam had not sinned, Christ would not have come into the world. But to permit evil for the sake of future good belongs exclusively to divine providence. We humans must take our bearing not from God’s providence, but from His law, which forbids evil absolutely.

If some pre-Enlightenment thinkers damned avarice as harmful to individual happiness or salvation, others condemned it as politically divisive. Crucial here was the ancient vision of the polity as a teleologically ordered whole, in which the public good is not just the product but the ultimate end of private actions, the “towards-which” they are directed. A bridle-maker, to use Aristotle’s example, aims at ease and agility in the cavalryman, the cavalryman at victory in war, and victory in war at the freedom and glory of the polis. Each small action is connected through a long chain of final causality to the greater good.

In a society so conceived, the avaricious man is an outsider, for his actions, even if they happen to further the common good, do not in any sense aim at that good, but only at his own enrichment. He is a permanent potential subversive, if not an actual criminal. To the extent that the spirit of avarice and luxury prevails in a nation, patriotism and virtue will wither away.

This “classical republican” critique of avarice could (and often did) conflict with the ethico-theological critique outlined above. From the standpoint of the res publica , personal happiness or salvation might seem just as selfish a goal as monetary gain, while from the standpoint of salvation, devotion to the res publica might seem sheer tribalism. But there was no necessary opposition between the two viewpoints. Mainstream Christian thinkers recognized the health of the political community as a genuine if subordinate good, and so could embrace a modified version of the classical republican critique. “No vice is worse [than avarice],” wrote John of Salisbury in Politcraticus , “especially in those who are at the head of states or hold any public office.”

Above all, all pre-Enlightenment thinkers agreed that avarice, whether primarily a spiritual or a political evil, is at any rate an intrinsic evil. Even if it has habitually bad effects, it is not bad because of these effects, but because of what it essentially is”a deflection of the will from its proper end, be that God, the public good, or some combination of the two.

None of this is to say that pre-Enlightenment attitudes to commerce were uniformly hostile. Aristotle and the early Church were fairly uncompromising, but from the late twelfth century onwards, schoolmen and friars strove to develop ethical principles appropriate to the emerging commercial society. Textbooks such as Johannes Nider’s fifteenth-century De Contractibus Mercatorum advised merchants on how to make a living without endangering their souls.

Still, the general attitude of this literature to commerce was one of accommodation to a distasteful worldly reality. Trade, like sex, was viewed as an inherently perilous activity, with its own distinctive temptations and vices. Its practitioners needed to be constantly on guard if they were not to fall victim to these. Nothing could be further from the outlook of the modern economist, for whom all commercial activity, provided it remains on the right side of the law, is morally unimpeachable. An intellectual revolution lay between these two attitudes. This revolution was initiated by the thinkers of the Enlightenment.

It is often said, following a famous suggestion of Max Weber, that modern capitalism has its roots in “the Protestant work ethic.” This is partly, but not wholly, true. Whatever the unique features of the Protestant work ethic, it was undeniably still an ethic ”that is, a valuation of economic acts, like human acts in general, as intrinsically good or bad. The Puritan divines refer freely to avarice, sloth, luxury, and so forth, even if they use these terms somewhat differently than their medieval predecessors. The thinkers of the Enlightenment, by contrast, assess economic acts in a radically new way, as good or bad in virtue of their consequences . A long and tortuous path connects the Reformation to its Enlightenment successor. Nonetheless, since my interest is in the terminus of this path”the advent of modern economics”I shall confine myself to the secular Enlightenment.

In his Fable of the Bees of 1714, the Anglo-Dutch essayist Bernard Mandeville put forward an outrageous suggestion. What if the “private vices” of avarice and luxury are transformable, through skilled political management, into the “publick benefits” of wealth and industry? With a satiric eye on contemporary England, Mandeville pictures a hive of vicious but prosperous bees:

The Root of Evil, Avarice,
That damn’d ill-natur’d baneful Vice,
Was Slave to Prodigality,
That Noble Sin; whilst Luxury
Employ’d a Million of the Poor,
And odious Pride a Million more:
Envy itself, and Vanity,
Were Ministers of Industry.

Mandeville’s paradoxes were widely denounced as immoral. But he was not a solitary eccentric. In Naples a few years later, the philosopher Giambattista Vico put forward an almost identical thought in his New Science :

Out of ferocity, avarice, and ambition, the three vices which lead all mankind astray, [society] makes national defense, commerce, and politics, and thereby causes the strength, the wealth, and the wisdom of the republics; out of these three great vices, which would certainly destroy man on earth, society thus causes the civil happiness to emerge. This principle proves the existence of divine providence: Through its intelligent laws the passions of men who are entirely occupied by the pursuit of their private utility are transformed into a civil order which permits men to live in human society.

Here was a radical break with the ancient social vision. The public good was no longer an end but an effect , no longer something to be aimed at but merely engineered. Esprit was superfluous. Institutional machinery would do the job instead. Neither Mandeville nor Vico had any clear idea how this machinery might work in practice”the one speaks vaguely of “the State’s Craft” while the other appeals to providence”but they were both convinced that some such machinery must exist. Their faith in social causality was as little empirical as Galileo’s faith in physical causality.

Why were Mandeville and Vico’s paradoxes only proposed in the early eighteenth century? Two reasons spring to mind. First, the rise of commercial Holland and England had impressed on thinkers the increasingly close relationship between economic and political power. Henceforth, it seemed that avarice and luxury might have to be tolerated, encouraged even, for the sake of the public revenues. Second, Newton’s recent explanation of planetary movement as the accidental offspring of gravity and inertia, as opposed to a manifestation of cosmic reason, encouraged philosophers to treat civic order in like fashion, as an unintended by-product of private actions.

Nonetheless, both Mandeville and Vico remained conventional insofar as they continued to talk about avarice and its companions as “vices.” It was this that gave their thesis its air of paradox: They seemed to be suggesting that evil should be encouraged for the sake of the public good. Few in the eighteenth century could swallow such a suggestion. “It seems upon any system of morality,” wrote Hume in 1752, “little less than a contradiction in terms to talk of a vice which is in general beneficial to society.” Two courses were open. Either the benefits of avarice could be denied and the derogatory epithet retained, or else, more radically, the benefits could be admitted and the activity redescribed so as to remove any taint of vice.

Tory Aristotelians such as Lord Bolingbroke excepted, the most seminal writers of the era opted for this latter, revisionary course. Increasingly, the acquisition of wealth was described in language suggestive of a benign if unheroic pastime. “There are few ways in which a man can be more innocently employed than in getting money,” was how Dr. Johnson famously put it. Le doux commerce , a late-seventeenth-century French epithet popularized by Montesquieu, was echoed in English and Scottish descriptions of commerce as “polishing” or “softening.” The term “avarice” was sidelined in favor of the more neutral “interest.” “Self-love,” originally an Augustinian term of opprobrium, was transformed by Rousseau, and Smith following him, into a neutral term designating a natural regard for one’s own welfare.

Meanwhile, “avarice” was retained, if at all, only for pathological or criminal forms of acquisition such as hoarding or swindling. Hume’s essay “Of Avarice” equates avarice with miserliness”traditionally only one of many species of avarice”and depicts it as a marginal, somewhat ludicrous vice, fit more for “wit and humor” than serious reproach. Adam Smith uses the word only six times in the whole of The Wealth of Nations , and then only in connection with specific misdeeds such as theft or debasing the coinage, or with foolish, self-defeating conduct. When referring to the motive underlying ordinary economic activity, he uses the colorless term “interest.”

The phasing-out of “avarice” and related terms”a process substantially completed by the time The Wealth of Nations appeared in 1776”had the effect of stripping economic activity of its ethical character, of rendering it morally indifferent. Legal infractions such as theft and fraud were still censored, of course, but not as expressions of the acquisitive drive so much as breaches of general principles of justice. This was a radical shift of perspective. For Aristotle and Aquinas, acts of avarice form a natural continuum ranging from the trivial to the viciously criminal. Aristotle’s list of the avaricious in the Nicomachean Ethics includes pimps, usurers, profiteers, dicers, petty thieves, and brigands; Aquinas in the Summa numbers restlessness, fraud, perjury, and violence among the “daughters” or effects of avarice. For the thinkers of the Enlightenment, by contrast, there is a clear-cut binary division between lawful and unlawful economic acts, and everything lawful is innocuous. Morality no longer pervades economic life from within but constrains it from without.

This transformation of attitudes to wealth creation cleared the ground for the new science of political economy. Having been demoralized, so to speak, economic acts became open to analysis and assessment in terms of their effects, intended or otherwise. They could enter into a calculus. It now made sense to ask, for instance, whether it might not be more beneficial in the long run to let corn prices fluctuate freely, even in a famine, than to regulate them”a question that could not have been decently posed when the duty to feed the poor was regarded as absolute. Without this prior demoralization of economic activity, Smith’s enterprise would have been unthinkable. Aquinas, for instance, would have regarded it as akin to an earnest discussion of the benefits of cutting up a hospital patient and distributing his organs among others.

What were the deeper ethical implications of this revolution in economic attitudes? Aquinas, recall, had condemned acts of avarice as bad in themselves, regardless of their “ultimate intention” or their expected but unintended consequences. Sacking a loyal worker to increase profits is wrong, even if done with the aim of amassing funds for charity and in expectation of future benefits to society.

From the new perspective, however, all expected consequences of the sacking”whether intended proximately, ultimately, or not at all”contribute equally to its ethical value. What matters is the aggregate. So long as our employer can expect any suffering caused by his action to be outweighed by its indirect social benefits, he has nothing to reproach himself with. Responsibility for promoting the good has been shifted onto an impersonal causal mechanism. He is free to pursue his own interest”legally, of course, and within the framework of a properly functioning market economy.

This new method of moral reckoning was to become famous as utilitarianism, but is more aptly called (in a term coined by G. E. M. Anscombe) consequentialism. For what was crucial was not the stress on utility or happiness”that, after all, had been central to many ancient ethical theories”but the insistence on pooling or aggregating all the expected consequences of an action. Utilitarianism was just one of many species of consequentialism, though always the dominant one. If consequentialism holds that the moral value of an act is determined by the sum of its expected consequences, utilitarianism adds that the only relevant consequences are pleasures and pains. But this limitation is not inherent in the general doctrine. The Russian nihilist Nechayev commended as moral everything favorable to the revolution. G. E. Moore defined as “right” all actions tending to bring about good states of mind. Both were consequentialists, but not utilitarians.

Utilitarian reasoning was at first confined to its native sphere of trade and industry. Adam Smith had a distinctly nonutilitarian appreciation of goods such as national defense and personal wholeness; his friend Hume continued to ascribe intrinsic as well as instrumental value to benevolence. Both men, moreover, were more concerned with explaining moral sentiments than with reforming them. Nonetheless, the seed was sown. In suggesting that consequences might in some cases be aggregated, Smith and Hume had hit upon a principle of universal application, ready to burst the bounds within which their own good sense confined it. Utilitarianism swiftly evolved into a comprehensive system of normative ethics, applicable not just to economic but to all human acts.

Meanwhile, economics itself moved in an increasingly formalistic direction, eclipsing Smith’s own ethical and sociological concerns. There was nothing accidental about this development. The colorful panorama of Smith’s economics concealed a hard calculus of consequences; once this essence was grasped, the rest fell away as superfluous. Those who invoke Smith against the formalism of contemporary economics do well to bear this in mind.

The discipline of economics has long since severed ties with utilitarianism in its classical, Benthamite form. The maximand is no longer conceived as a distinct mental state but as the satisfaction of preferences or the realization of certain “capacities.” Nonetheless, the consequentialism in utilitarianism”the insistence on pooling the various consequences of an act, regardless of their intentional status”remains integral to any form of economic analysis. This is why economics has no use for “avarice” or other terms designating acts and motives as intrinsically good or bad. From the economic point of view, the value of an act or motive depends on the particular chain of effects to which it gives rise, which varies from situation to situation. The same drive that leads to mass starvation under conditions of monopoly leads to general affluence under conditions of competition. Everything depends on the institutional context.

But although enshrined in economics and cognate fields, consequentialist thinking has never captured the popular imagination, and is fiercely resisted by the churches. Here is the explanation”to return to where I started”for the conflict between popular and academic accounts of the financial crash. While one side calls in urgent tones for justice, the other scrutinizes causes and consequences. A parallel conflict can be seen in the sphere of sex, where popular thinking continues to regard certain acts and desires as perverse, while educated opinion tends to the view that if no one is harmed, then nothing is wrong.

According to a familiar progressivist narrative, non-consequentialist intuitions are a theological relic, destined to give way in time to a more enlightened standpoint. I believe, conversely, that they are the natural and indispensable basis of any humanly supportable ethics. They can be suppressed only fitfully, and with considerable intellectual effort. An economic training is very serviceable to this end. It takes, for instance, a thorough drilling in the law of comparative advantage to be able to regard with complacence the spectacle of a company “off-shoring” hundreds of jobs from Sheffield to Mumbai. “The invisible hand theory was a great relief to CEOs,” writes Joseph Stiglitz, “for it told them that by doing well (for themselves) they were doing good (for society). Not only should they feel no guilt in greed; they should feel pride.” What the rich and powerful once sought in divine providence, they now find in the market mechanism”assurance that their good is the public good, and that all is for the best in this best of all possible worlds.

Does the traditional ethical view of economic life have any future? The prospect, it must be admitted, looks bleak. Modern economics has built up a formidable body of theory from which thick evaluative terms are in principle excluded. “Avarice” and “usury” last made a serious appearance in the work of Keynes, but were swiftly disowned by his disciples, who viewed them as medieval gargoyles on an otherwise splendid hydraulic machine. Today, ethics impinges on economics only from without, in the formulation of policy goals and side constraints. The question of how to fulfill these goals, within these constraints, is a purely technical one. There is no space for an ethics of specifically economic acts and motives.

From a modern point of view, the most distasteful feature of traditional economic thought is its pedagogic ambition. The writings of Aristotle and Aquinas express an aspiration to mold people’s characters, to make them less greedy, more generous, and so forth. Modern economists, by contrast, take people as they are, not as they ought to be. Their ambition is limited to changing outward conduct; they have no desire to alter the soul. Contrary to popular myth, economists do not assume that people are entirely selfish. They assume only that a) most people are not indifferent to material incentives and that b) this gives us some leverage over their behavior. Economists pride themselves on the minimalism of this approach. The old aspiration to forge character strikes them as both utopian and despotic.

There is hard-won wisdom in this outlook. In complex, fractured societies, any attempt to rule through direct moral exhortation can lead only to tyranny. Material incentives have become an indispensable tool of government (even the Stakhanovites required extra pay). Nonetheless, reliance on incentives need not imply indifference to questions of character and motivation. Incentives can be understood not just technocratically, as tools for channelling self-interest this way or that, but pedagogically, as instruments for fostering virtue. A favorable incentive structure makes it easier to do good, or at any rate harder to do evil. It minimizes temptation. T. S. Eliot put it well when in The Idea of a Christian Society he defined a Christian society as one so structured that, for ordinary believers, “the difficulty of behaving as Christians should not impose an intolerable strain.”

Democratic states use economic incentives all the time to encourage motives and ways of life considered to be civilized. They limit hours of work, restrict or forbid Sunday trading, regulate where and how advertisers may operate. In a utilitarian political culture, such legislation is usually justified on grounds of economic efficiency or “health and safety,” but its unacknowledged motive is ethical. These states wish to erect safeguards against the powerful human tendency to rapacity.

If we acknowledged the legitimacy of such motives, we might think of many further ways in which the power of the state could be harnessed to discourage avarice. Of course, such proposals will encounter the objection of “paternalism,” but there is nothing inherently paternalistic about a citizen body collectively deciding to encourage certain forms of life and discourage others. We can take inspiration from Monsignor John A. Ryan, the influential early-twentieth-century American moral theologian and economic critic:

One of the most baneful assumptions of our materialistic industrial civilization is that all men should spend at least one-third of the twenty-four-hour day in some productive occupation . . . . If men still have leisure, new luxuries must be invented to keep them busy and new wants must be stimulated . . . . Of course, the true and rational doctrine is that when men have produced sufficient necessaries and reasonable comforts and conveniences to supply all the population, they should spend what time is left in the cultivation of their intellects and wills, in the pursuit of the higher life.

Msgr. Ryan recalls to mind what should never have been lost: We need always to think about economic activity in ways that do not exclude consideration of what it means to live a good human life.

Edward Skidelsky is lecturer in philosophy at Exeter University. He is coauthor, with his father Robert Skidelsky, of How Much is Enough: Money and the Good Life , forthcoming in 2012.