Thursday, May 25, 2006

Column on Self & Its Interests

Self and its Interests

Tibor R. Machan

Adam Smith, the founder of modern economics and author of The Wealth of
Nations (1776), is perhaps most famous for writing the following passage:
...By preferring the support of domestic to that of foreign industry, [an
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. Nor
is it always the worse for the society that it was no part of it. 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....
Sadly, however, certain aspects of what he wrote have been used often by
the critics of the very system of political economy, the free market, that
he had tried to promote. This is because critics have insisted on a very
narrow understanding of the concepts ?his own gain? and ?self-interest.?
Perhaps even Smith bought into that narrow interpretation. But never mind
that for now.
What all those who keep insisting that free market economics is based on
the principle of self-interest need to appreciate is that, well, people do
not produce what they do because they insist on gaining from it all for
themselves. Quite often, if indeed not most often, people produce so as to
be able to earn wealth which then they may use for a whole host of
purposes, some of them directly benefiting themselves, some their family,
some their friends, some various causes they wish to support, some total
strangers who need help, you name it, the goals can be endless.
When people produce wealth ?for themselves,? it is often simply so that
it will be they who can proceed to transfer that wealth to someone else.
The crucial element isn?t so much aiming to satisfy oneself but to enable
oneself to distribute the wealth one creates toward ends one deems
worthwhile, never mind whether these ends serve oneself or someone else or
some goal nearly unrelated to oneself.
What the right to private property and the liberty to earn wealth achieve
isn?t so much self-enrichment, although that is part of it. What they
achieve is enabling people to allocate what they earn as they think it
should be allocated. In other words, it is the freedom to put wealth to
the use one thinks it should be put to, never mind whether that use is
Indeed, ?self-interest? could be read to mean nothing more than ?whatever
one is interested in.? And that could be a great many things quite apart
from one?s ?own gain.? Even that, one?s own gain, is often utilized
ultimately to provide support for objectives one may not gain from at
all?when one donates one?s wealth to projects such as enhancing the arts,
supporting some plants or animals, subsidizing certain publications,
helping those struggling in the Third World, coming up with a cure for a
disease, and all the rest of what people spend their wealth on. Even when
people spend it on, say, lawn furniture or household appliances, they most
often aren?t the only ones who gain from this.
Those who criticize the free market often have as their target not to
much personal enrichment?although that is what they rail about a lot
because of how it resonates with the public?but the freedom to decide to
what end one?s wealth will be devoted. They want to be the ones who decide
the goals to be supported by one?s productivity. They are, indeed, the
narrowly self-interested ones who would limit other people?s liberty to
keep and hold resources they have made possible because what these critics
want is to be in control of these resources.
That is why so many public officials and intellectuals find lowering
taxes and the right to private property so objectionable?not so much
because they enrich people but because they enable them to control where
wealth will be directed. This is what drives them crazy?not being in power
to decide what is going to get supported.

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