Photograph by Stu Rosner

The Value of Values

The principal Commencement speaker, Alan Greenspan, chairman of the board of governors of the Federal Reserve System, analyzed an economy in transition, as "quintessential manifestations of America's industrial might earlier this century" have given way to ideas "as creators of value." Sustaining growth, he argued, depends not just on students' technical proficiency, but on educational institutions' success in helping "transform skills and intelligence into wisdom--into a process of thinking capable of forming truly new insights," a process fostered by "exposure to philosophy, literature, music, art, and languages." Greenspan then turned to the fundamental importance of character. Excerpts from his introduction and his remarks on personal integrity follow.

We are here to honor the achievements and the promise of the members of the graduating class of 1999 and of all the other graduating degree candidates. To them, let me say: You are being bequeathed the tools for achieving a material existence that neither my generation nor any that preceded it could have even remotely imagined as we began our life's work. What you must shape for yourselves are those values that will enable you to thrive in a world that is becoming increasingly competitive and frenetic.

To the parents and friends of all those receiving Harvard degrees today, let me say: I had planned to offer you some useful investment advice but, regrettably, in the end, was dissuaded. My staff informed me that those of you who in recent years have been paying Harvard tuition or have contributed to the endowment fund, must by now have little left to invest.

But clearly you have already made the best investment there is: education....

Learning and knowledge--and even wisdom--are not enough....At the risk of sounding a bit uncool, I say to the graduating class that your success in life, and the success of our country, is going to depend on the integrity and other qualities of character that you and your contemporaries will continue to develop and demonstrate over the years ahead. A generation from now, as you watch your children graduate, you will want to be able to say that whatever success you achieved was the result of honest and productive work, and that you dealt with people the way you would want them to have dealt with you.

Civilization, our civilization, rests on that premise. It presupposes the productive interaction of people engaged in the division of labor, driven--I cannot resist the jargon--by economic comparative advantage. This implies mutual exchange to mutual advantage among free people. Coercive societies and coercive relationships among people rarely enhance the state of what we call civilization.

I presume that I could offer all kinds of advice to today's graduates from my half-century in private business and government. I could urge you all to work hard, save, and prosper. And I do. But transcending all else is being principled in how you go about doing those things....

I do not deny that many appear to have succeeded in a material way by cutting corners and manipulating associates, both in their professional and in their personal lives. But...[t]he true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake....I have found no greater satisfaction than achieving success through honest dealings and strict adherence to the view that for you to gain, those you deal with should gain as well....

And beyond the personal sense of satisfaction, having a reputation for fair dealing is a profoundly practical virtue. We call it "good will" in business and add it to our balance sheets.

Trust is at the root of any economic system based on mutually beneficial exchange. In virtually all transactions, we rely on the word of those with whom we do business....If a significant number of businesspeople violated the trust upon which our interactions are based, our court system and our economy would be swamped into immobility....

In today's world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward. Manufactured goods often can be evaluated before the completion of a transaction. Service providers, on the other hand, usually can offer only their reputations.

The extraordinarily complex machine that we call the economy of the United States is, in the end, made up of human beings struggling to improve their lives. The individual values of those Americans will continue to influence the structure of the institutions that support market transactions, as they have throughout our history.... Our system works fundamentally on individual fair dealing....

While we have achieved much in this regard, more remains to be done. Considerable progress, for example, has been evident in recent decades in the reduction of racial and other forms of discrimination. But this job is still far from completion....If we succeed in opening up opportunities to everyone, our national affluence will almost surely become more widespread. Of even greater import is that all Americans believe that they are part of a system they perceive as fair and worthy of support. Our forefathers bestowed upon us a system of government, and a culture of enterprise, that has propelled the United States to the greatest prosperity the world has ever experienced....I know you will improve upon this inheritance in ways that we have yet to imagine. I offer you all my congratulations and wish you success in your chosen careers.

You honor me today by listening to the musings of an old, idealistic, central banker. Thank you.

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