Analysis: The green-eyed capitalist

By SAM VAKNIN, UPI Senior Business Correspondent

SKOPJE, Macedonia, Aug. 13 (UPI) -- Conservative sociologists self-servingly marvel at the peaceful proximity of abject poverty and ostentatious affluence in American -- or, for that matter, Western -- cities.

Devastating riots do erupt, but these are reactions either to perceived social injustice (Los Angeles and the Watts riots in 1965) or political oppression (Paris 1968). The French Revolution may have been the last time the urban sans-culottes raised a fuss against the economically enfranchised.


This pacific co-existence conceals a maelstrom of envy. Behold the rampant Schadenfreude that accompanied the antitrust case against the predatory but loaded Microsoft.

Observe the glee that engulfed many destitute countries in the wake of the Sept. 11 atrocities against America, the epitome of triumphant prosperity.

Witness the post-WorldCom orgiastic castigation of avaricious CEOs.

Envy, which is a pathological manifestation of destructive aggressiveness, is distinct from jealousy.


The New Oxford Dictionary of English defines envy as: "A feeling of discontented or resentful longing aroused by someone else's possessions, qualities, or luck ... Mortification and ill-will occasioned by the contemplation of another's superior advantages."

Pathological envy -- the fourth deadly sin -- is engendered by the realization of some lack, deficiency or inadequacy in oneself. The envious begrudge others their success, brilliance, happiness, beauty, good fortune or wealth. Envy provokes misery, humiliation and impotent rage.

Envious people cope with their pernicious emotions in five ways:

1. They attack the perceived source of their frustration in an attempt to destroy it, or "reduce it" to their "size." Such destructive impulses often assume the disguise of championing social causes, fighting injustice, touting reform or promoting an ideology.

2. They seek to subsume the object of envy by imitating it. In extreme cases, they strive to get rich quick through criminal scams or corruption. They endeavor to outsmart the system and shortcut their way to fortune and celebrity.

3. They resort to self-deprecation. They idealize the successful, the rich, the mighty and the lucky and attribute to them super-human, almost divine, qualities. At the same time, they humble themselves. Indeed, most of this strain of the envious end up disenchanted and bitter, driving the objects of their own erstwhile devotion and adulation to destruction and decrepitude.


4. They experience cognitive dissonance. These people devalue the source of their frustration and envy by finding faults in everything they most desire and in everyone they envy.

5. They avoid the envied person and thus the agonizing pangs of envy.

Envy is not a new phenomenon. Belisarius, the general who conquered the world for Emperor Justinian, was blinded and stripped of his assets by his envious peers.

I -- and many others -- have written extensively about envy in command economies. Nor is envy likely to diminish.

In his book, "Facial Justice," Leslie Hartley describes a post-apocalyptic dystopia, New State, in which envy is forbidden and equality extolled and everything enviable is obliterated. Women are modified to look like men and given identical "beta faces." Tall buildings are razed.

Joseph Schumpeter, the prophetic Austrian-American economist, believed that socialism will disinherit capitalism.

In "Capitalism, Socialism, and Democracy," he foresaw a conflict between a class of refined but dirt-poor intellectuals and the vulgar but filthy rich businessmen and managers they virulently envy and resent.

Samuel Johnson wrote: "He was dull in a new way, and that made many people think him great." The literati seek to tear down the market economy that they feel has so disenfranchised and undervalued them.


Hitler, who fancied himself an artist, labeled the British a "nation of shopkeepers" in one of his bouts of raging envy -- in this, he only copied Adam Smith, who meant the epithet as a compliment.

Ralph Reiland, the Kenneth Simon professor of free enterprise at Robert Morris University, quotes David Brooks of the Weekly Standard, who christened this phenomenon "bourgeoisophobia."

"The hatred of the bourgeoisie is the beginning of all virtue," wrote Gustav Flaubert. He signed his letters "Bourgeoisophobus" to show how much he despised "stupid grocers and their ilk ... Through some screw-up in the great scheme of the universe, their narrow-minded greed had brought them vast wealth, unstoppable power and growing social prestige."

Reiland also quotes from Ludwig van Mises's "The Anti-Capitalist Mentality:" "Many people, and especially intellectuals, passionately loathe capitalism. In a society based on caste and status, the individual can ascribe adverse fate to conditions beyond his control.

"In ... capitalism ... everybody's station in life depends on his doing ... (what makes a man rich is) not the evaluation of his contribution from any 'absolute' principle of justice but the evaluation on the part of his fellow men who exclusively apply the yardstick of their personal wants, desires and ends ...


"Everybody knows very well that there are people like himself who succeeded where he himself failed. Everybody knows that many of those he envies are self-made men who started from the same point from which he himself started. Everybody is aware of his own defeat.

"In order to console himself and to restore his self-assertion, such a man is in search of a scapegoat. He tries to persuade himself that he failed through no fault of his own. He was too decent to resort to the base tricks to which his successful rivals owe their ascendancy. The nefarious social order does not accord the prizes to the most meritorious men; it crowns the dishonest, unscrupulous scoundrel, the swindler, the exploiter, the 'rugged individualist.'"

In "The Virtue of Prosperity," Dinesh D'Souza accuses prosperity and capitalism of inspiring vice and temptation. Inevitably, it provokes envy in the poor and depravity in the rich.

With only a modicum of overstatement, capitalism can be depicted as the sublimation of jealousy. As opposed to destructive envy, jealousy induces emulation. Consumers -- responsible for two-thirds of America's gross domestic product -- ape role models and vie with neighbors, colleagues and family members for possessions and the social status they endow.


Productive and constructive competition -- among scientists, innovators, managers, actors, lawyers, politicians and the members of just about every other profession -- is driven by jealousy.

The eminent Nobel prize-winning British economist and philosopher of Austrian descent, Friedrich Hayek, suggested in "The Constitution of Liberty" that innovation and progress in living standards are the outcomes of class envy.

The wealthy are early adopters of expensive and unproven technologies. The rich, with their conspicuous consumption, finance the research and development phase of new products. The poor, driven by jealousy, imitate them and thus create a mass market which allows manufacturers to lower prices.

But jealousy is premised on the twin beliefs of equality and a level playing field. "I am as good, as skilled, and as talented as the object of my jealousy," goes the subtext. "Given equal opportunities, equitable treatment and a bit of luck, I can accomplish the same or more."

Jealousy is easily transformed to outrage when its presumptions -- equality, honesty and fairness -- prove wrong. In a paper recently published by Harvard University's John M. Olin Center for Law and titled "Executive Compensation in America: Optimal Contracting or Extraction of Rents?" the authors argue that executive malfeasance is most effectively regulated by this "outrage constraint."


They write: "Directors (and non-executive directors) would be reluctant to approve, and executives would be hesitant to seek, compensation arrangements that might be viewed by observers as outrageous."

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