In the wake of Greg Smith’s now-legendary resignation in The New York Times, worldwide scrutiny has naturally focused on Goldman Sachs. How will his assault on the bank’s culture impact its clients and its leadership? Is his description of the firm fair? However, these are merely superficial questions. The true implications are far broader and affect the prospects for economic growth across America and the world.

Smith’s accusation — that “the interests of the client continue to be sidelined in the way the firm operates and thinks about making money” — is not novel to Wall Street. It has already been 25 years since Gordon Gekko uttered the iconic phrase “greed … is good.”

Greed

Greed wasn’t new to Wall Street back then. And more recently, it took on an entirely new meaning when America’s financial institutions risked the entire world economy for short-term gains from selling what The Economist has called “those evil credit-default swaps, collateralized-debt obligations, and so on.”

But it is not merely the fault of Goldman Sachs or the rest of Wall Street. For decades now, America has bought into the notion that free and fair competition among rational, greedy actors was good for all of us. Indeed, we thought it was good for the world.

That shibboleth has collapsed. Looking back, we see that innovation — not greed — is what has fueled the American economy and job growth for more than a century. And the culture of greed is arguably the opposite of the culture of innovation.

Trust

Apple was creating iPhones, while Goldman Sachs was creating credit-default swaps. Which one would you rather have fuel the economy? If we examine the hidden dynamics of Silicon Valley, we discover an alternative to the world described by Smith.

I’ve lived in, worked in, and studied Silicon Valley for years. The secret to its success, although hard to see or touch, is its unique culture. This culture was birthed on the frontier and is one based on pragmatic cooperation: individualism tempered by the need to participate within a community. It’s the same culture that enabled complete strangers to band together to form wagon trains heading West and put their lives in the hands of others whom they had only just met. The history of Silicon Valley reveals that innovation thrives in a culture based on trust and shared community.

A Rainforest

Silicon Valley is not a plantation run by precisely controlling and exploiting finite assets. It is a “rainforest” that thrives because its many elements mix together to create new and unexpected flora and fauna. It births new species that are greater than the sum of their elements.

The mixing of those elements is made possible only by a culture based on trust. It’s trust, after all, that enables human beings to band together when we are instinctively tribal. We most easily place our confidence in people most like us ― with our own ethnicity, experience, and frames of reference ― when in fact diversity is far more conducive to innovation than tribalism.

The Culture of Silicon Valley

The culture of Silicon Valley encourages people with diverse skills and experiences to meet and trust each other and take a chance together. That culture is ingrained because crucial keystone institutions, from venture capital firms to attorneys to entrepreneurs, generally treat the community as more important than the “winning” of any individual transaction. It is a culture based on, among other things, seeking fairness, not advantage.

No one would accuse Goldman Sachs of “seeking fairness, not advantage.” As Greg Smith wrote, “It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.”

But Goldman Sachs is just one player in the bigger game that America’s entire establishment — its economists, policymakers, and executives — bought into. For decades, we have all viewed economics and business through a reductionist lens: human beings as cold-hearted, zero-sum automatons.

Now, it is time for all of us to put a dose of humanity back into the equation. Not just for the warm fuzzy feeling, but because trust, fairness, community, altruism — they actually work. The risk in a zero-sum game is that people will stop trusting altogether. And trust is the lifeblood of innovation, which is the ultimate positive-sum game.

Although the world is examining the culture of Goldman Sachs, it’s the culture of Silicon Valley that should fascinate us. That win-win culture of innovation provides the blueprint for the future, and it is the key to the economic growth that America so desperately seeks today.

Victor W. Hwang is co-author of The Rainforest: The Secret to Building the Next Silicon Valley (Regenwald, 2012) and Managing Director of T2 Venture Capital in Silicon Valley.

[Top image credit: jejim/Shutterstock]