TGIF: Benevolent Self-Interest

The most famous sentence in Adam Smith's 1776 treatise, An Inquiry into the Nature and Causes of the Wealth of Nations, appears in Book I, Chapter 2:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.

It's a beautifully written sentence (except that he should have twice written "his" instead of "their"). He might have written, "It is not from the benevolence of producers that we expect consumer goods, but from their attending to their businesses." Ho hum. Who would have remembered it?

More importantly, however, Smith's sentence pointed to a core truth of full liberalism, or what he called the "obvious and simple system of natural liberty": namely, you cannot properly own other people and should not act as if you do. That's the pro-freedom, anti-slavery premise, written about 30 years before Great Britain would begin to stop the slave trade between African chieftains and Europeans, among others. Let's never forget that while the West did not invent slavery (far from it), the West, uniquely, did invent anti-slavery both in theory and practice. The first anti-slavery organization was founded by Quakers in 1774-75 in Philadelphia, my hometown. English Quakers followed in 1787. No known anti-slavery societies in Africa, Arabia, or Asia have come to our attention.

In his sentence Smith was saying that if you want someone (other than, say, a loved one or friend) to do something for you, you offer money or some product he wants in return. You transact business. The person behind the counter does not exist for your sake, and you should not expect him to work long hours out of duty. He has a life precious to him and need not justify his existence. He is an end in himself, as John Locke had written in the previous century. (Yes, Kant said it too, but for him it was not connected to the pursuit of happiness.)

Smith continued:

We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chuses to depend chiefly upon the benevolence of his fellow-citizens....

Here I differ with Smith. Self-love, that is, concern with one's interests, is part of our humanity. No conflict exists between making the most of the one life one lives and goodwill toward others. We are engaged in a common challenge—living—and empathy naturally flows from that fact. It is a pernicious doctrine, indeed, that holds otherwise. Clearly, a merchant or manufacturer prospers by attending to his customers' preferences. Real liberals have always emphasized the fundamental harmony of interests in the market. The great libertarian journalist John Stossel calls this the "double thank you" that consummates transactions.

I suspect that the word selfish acquired its unfortunate and exclusively negative sense as a consequence—emanating from Jerusalem, not Athens—of a hidden agenda aimed at acquiring power. Smith regretted that moral philosophy had become detached from the Greek notion of the pursuit of happiness. The Wealth of Nations (Book 5, Chapter 1, Part III) includes this passage:

Ancient moral philosophy proposed to investigate wherein consisted the happiness and perfection of a man, considered not only as an individual, but as the member of a family, or a state, and of the great society of mankind. In that philosophy, the duties of human life were treated of as subservient to the happiness and perfection of human life. But, when moral as well as natural philosophy came to be taught only as subservient to theology, the duties of human life were treated of as chiefly subservient to the happiness of a life to come. In the ancient philosophy, the perfection of virtue was represented as necessarily productive to the person who possessed it, of the most perfect happiness in this life. In the modern philosophy, it was frequently represented as almost always inconsistent with any degree of happiness in this life, and heaven was to be earned by penance and mortification, not by the liberal, generous, and spirited conduct of a man.... By far the most important of all the different branches of philosophy became in this manner by far the most corrupted. [Emphasis added.]

He must have had a premonition about Kant, who developed his duty-based moral theory in the following decades. How Smith's passage relates to his first book, The Theory of Moral Sentiments, I will leave to others. We don't need to explain empathy in terms of sentiment or impartiality. Rational self-interest will get us where we want to go.

Continuing with Smith's point about market transactions (Book IV, Chapter 2):

But it is only for the sake of profit that any man employs a capital in the support of industry; and he will always, therefore, endeavour to employ it in the support of that industry of which the produce is likely to be of the greatest value, or to exchange for the greatest quantity either of money or of other goods.... [E]very individual ... intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

Then Smith goes a step further:

Nor is it always the worse for the society that it was no part of [his intention]. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

People who dislike market-oriented society seem to despise what Smith celebrated. "It's not enough to provide wanted goods and services to strangers," they'd say, "You should do it because you love them." Profit is seen as a spoiler. In this view, the profit seeker lacks moral worth because he benefits from serving customers. However, that's a feature, not a bug: in the broader context, the pursuit of self-interest in a free society ultimately benefits us all.

TGIF: Markets and the Pursuit of Happiness

For some time now I've thought that many people's antagonism to the market is motivated not by moral or economic objections but by aesthetic criteria. (I discuss this in What Social Animals Owe to Each Other and here.)

By that I mean they simply find market relations -- involving private property, contracts, profit, competition, and "impersonal forces" such as supply and demand -- unattractive, even ugly. They wish society had nothing to do with such relations, which they (mistakenly) believe have displaced the cozy cooperation and communalism that marked an earlier golden age. They long to return to the beautiful but lost Garden of Eden, where markets don't exist and people can be human again. They make just two errors. First, they misunderstand the market. For example, competition and cooperation go together. And second, the longed-for Eden never existed. Before human beings transformed the earth, nature was a cruel master. People weren't always so nice either.

The aesthetic rejection of markets could explain why we libertarians have made little progress in persuading people that crony capitalism is significantly different from the free market. The people who find markets ugly don't care whether businesses get favors from the government or not. That's not what matters to them.

Something underlies this revulsion at the market and the freedom it entails: self-interest, or what the critics would call selfishness. It's also been called the pursuit of happiness. (Of course, Ayn Rand, who held that the pursuit of self-interest is entirely proper embraced the word selfishness at least for the shock value. See her book The Virtue of Selfishness.) The aesthetic rejection of markets may rest on an aesthetic reaction to self-interest. The line between ethics and aesthetics can be blurry.

So we must ask, with Ayn Rand, what's wrong with self-interest? It is not a good answer to say that self-interest means exploiting other people, defrauding them, and even physically hurting them. But this assumes that self-interest is entirely subjective or actually requires the domination of others. That's nothing more than a confession. It's not proof. Because someone says something is good doesn't make it so. And why would self-interest require domination? (For Rand it emphatically did not.)

Like the boy in "The Emperor's New Clothes," we can ask in all innocence, What's wrong with self-interest? It doesn't seem a priori bad. On the contrary, you get only one life. Why not make the most of it in all sorts of ways? Put that way, most people would agree.

It will not help the critic's case to equate self-interest with greed, which is never defined. It's just a lazy slur.

Rand's Objectivism justified rational egoism and political economy from a metaphysics and an epistemology of reason. She did not think that people could be won over to freedom and free markets if they were hostile to reason and egoism, that is, the principle that one's own life is one's highest value, the value on which all others depend. That makes sense to me.

And that raises a question: if the pursuit of self-interest (happiness) were to lose its stigma, which it has at least part-time for many people, would opposition to the freedom and free market disappear? And if so, how can we remove the stigma?

It won't be enough to argue, as many market advocates do, that in markets people altruistically service one another. It's true that in voluntary transactions both parties. benefit But market opponents will scoff that since the motive for this "service" is self-interest, not self-sacrifice, it doesn't count.

Fortunately, we can try to destigmatize self-interest by invoking a pillar of Western civilization that for centuries was held in high esteem. I mean more than using Jefferson's great term in the Declaration of Independence the pursuit of happiness. I have mind the ethics of personal flourishing, or eudemonia, bequeathed by the ancient Greek philosophers, especially Aristotle. The work of Benedict Spinoza in the 1600s inherited many of its virtues.

For Aristotle, the path to happiness in the sense of the good life is to live according to one's nature as a rational/social being. Reason is in the driver's seat in individual and social matters. This suggests a society based on individualism, persuasion, and trade rather than collectivism, force, and domination. (The Greek philosophers' politics, however, left much to be desired.) The virtues we associate with the ancient Greeks -- such as justice, prudence, moderation, and courage -- described this way of living intelligently.

Reason and cooperation don't just get rational people what they want; those things are what rational people want because that's the human way of living. (I'm taking guidance here from philosopher Henry B. Veatch's Aristotle: A Contemporary Interpretation and Rational Man: A Modern Interpretation of Aristotelian Ethics and from philosopher Roderick T. Long's Reason and Value: Aristotle versus Rand and "Economics and Its Ethical Assumptions.")

Here is a common-sense ethics of rational self-interest that most people could sign on to. It might erode the stigma of selfishness. It's worth noting that In his Nicomachean Ethics, book 9, chapter 8, Aristotle defended -- of all things -- "self-love." He wanted to show that, contrary to popular opinion, the person who most loves himself is the one who lives intelligently in pursuit of happiness, which Aristotle regards as noble. He wrote:

We blame, it is said, those who love themselves most, and apply the term self-loving to them as a term of reproach: and, again, he who is not good is thought to have regard to himself in everything that he does, and the more so the worse he is; and so we accuse him of doing nothing disinterestedly. The good man on the other hand, it is thought, takes what is noble as his motive, and the better he is the more is he guided by this motive, and by regard for his friend, neglecting his own interest.

But this theory disagrees with facts, nor is it surprising that it should. For it is allowed that we ought to love him most who is most truly a friend, and that he is most truly a friend who, in wishing well to another, wishes well to him for his (the other’s) sake, and even though no one should ever know. But all these characteristics, and all the others which go to make up the definition of a friend, are found in the highest degree in a man’s relations to himself; for we have already seen how it is from our relations to ourselves that all our friendly relations to others are derived....

Those who use self-loving as a term of reproach apply the name to those who take more than their due of money, and honour, and bodily pleasures; for the generality of men desire these things, and set their hearts upon them as the best things in the world, so that they are keenly competed for. Those, then, who grasp at more than their share of these things indulge their animal appetites and their passions generally—in a word, the irrational part of their nature. But this is the character of the generality of men; and hence the term self-loving has come to be used in this bad sense from the fact that the greater part of mankind are not good. It is with justice, then, that we reproach those who are self-loving in this sense.

That it really is to those who take more than their due of these things that the term is usually applied by the generality of men, may easily be shown; for if what a man always set his heart upon were that he, rather than another, should do what is just or temperate, or in any other way virtuous—if, in a word, he were always claiming the noble course of conduct, no one would call him self-loving and no one would reproach him.

And yet such a man would seem to be more truly self-loving. At least, he takes for himself that which is noblest and most truly good, and gratifies the ruling power in himself [reason], and in all things obeys it. But just as the ruling part in a state or in any other system seems, more than any other part, to be the state or the system, so also the ruling part of a man seems to be most truly the man’s self. He therefore who loves and gratifies this part of himself is most truly self-loving.

Again, we call a man continent or incontinent, according as his reason has or has not the mastery, implying that his reason is his self; and when a man has acted under the guidance of his reason he is thought, in the fullest sense, to have done the deed himself, and of his own will.

It is plain, then, that this part of us is our self, or is most truly our self, and that the good man more than any other loves this part of himself. He, then, more than any other, will be self-loving....

The good man, therefore, ought to be self-loving; for by doing what is noble he will at once benefit himself and assist others: but the bad man ought not; for he will injure both himself and his neighbours by following passions that are not good.

Note that Aristotle says that living rationally (nobly, egoistically) --  -- "assists others" as well as himself. Think about the producer and merchant who do so much good for others. But that obviously is not the reason to live that way. The reason is that it is the human way to live and therefore the way to flourish.

I'm not saying this will persuade anyone with an aesthetic aversion to the market. It certainly won't persuade one who lusts for power over others. But we've got to do something to remove the stigma from self-interest. Otherwise, we'll never see a truly free society.

What Is Mutual Altruism?

According to Richard Dawkins in The Selfish Gene, theft is "selfish," while trade is "mutually altruistic." If genes and people are "selfish," as Dawkins believes, why does mutual altruism, which includes all forms of cooperation, ever happen? He replies that it happens because mutual altruism benefits the parties more than "purely selfish" behavior would. This is an astounding acknowledgment. 

If that's so -- and I believe it is -- why not call cooperation mutual selfishness, mutual self-interest, or something like that? Why introduce the idea of mutual altruism if in fact such actions are more "selfish" than what Dawkins thinks of as pure selfishness. 

I admire Dawkins a great deal, but here is a case where better philosophy would have made for better evolutionary theory. As he would have it, altruism, at least in its mutual mode, is more selfish than selfishness, and that makes little sense.

No one shed more light on the mutual self-interest of cooperation than Ludwig von Mises in Human Action. See the section titled "The Harmony of the 'Rightly Understood' Interests" in chapter 24, where he writes, "The fact that my fellow man wants to acquire shoes as I do, does not make it harder for me to get shoes, but easier." Thus in the market human beings convert competition for consumption, which is the rule in the rest of the animal kingdom, into competition for production, which benefits all people.

That doesn't sound much like the law of the jungle, does it?