Altruism’s Bad Influence

Tibor R. Machan

Putting it plainly, altruism is very popular, at least as far as what people verbally champion. It’s not so popular in action because, well, it is impossible to practice consistently. As the poet W. H. Auden put it, “We are here on earth to do good for others. What the others are here for, I don't know.”

In fact, of course, what people much more reasonably support is benevolence, generosity and kindness, all in the right measure, not to a fault. It shows by what they do, not by what they say. Unselfishness may be advocated but it is hardly ever practiced much. That’s because unselfishness means devoting oneself first to other people—not just loved ones and in proper proportion but to all, and all of the time. Which is impossible.

Yet, because it is so popular to champion it as an ideal, despite being an impossible ideal it is promoted all over the place. Take, for example, business ethics, the discipline in which I do much work and which is teeming with theorists who preach the altruist line. They call it the “stakeholder theory.”

The idea, advocated by all sorts of business ethics professors who teach and write the subject across the world, is that when company officers make their decisions, they ought to keep in mind not shareholders—those for whom they work, the owners of the firm—but all those who have an interest in it, the stakeholders. Thus, instead of fostering the company’s bottom line, making it prosper, managers should give away the store to those who need help.

Take a company that may stay afloat and profitable only by moving from an expensive plant to one that is more affordable. Should they make the move? The shareholder theorists would agree—of course, move, since that will keep you solvent, may even bring in a profit. Stakeholder theorists, however, will argue—keep in mind all those in your neighborhood who depend on the presence of the firm, like the cleaner or the restaurant next door patronized by employees. If the plant is moved, they will suffer. So, don’t move.

Of course, one cannot run a business this way. My little gym I’ve been going to for two years just decided it had to move because the rent—driven, incidentally, by sudden higher tax assessments—increased beyond its means. So now it is moving, way out of my reach.

OK, but what about me? And what about the various establishments patronized around the corner by gym members who will lose their business? Stakeholder theorists, the altruists, advocate that the gym should think of these establishments and not leave them in a lurch. Never mind that the owners of the gym will be driven aground from such a decision.

The circumstances of my little gym are duplicated all over the place in the business world. Yet instead of urging managers to do the right thing and take their plant where the rent, etc., are affordable, they are being told by business ethicists—advocates of the social responsibility of corporations—that they have an obligation to take care of the stakeholders.

Nor is this an idea urged on managers as a matter of their free choice. No, the stakeholder theory is actually being promoted as the basis of public policy, of laws—for example, in various states so called hostile takeovers are legally prohibited, even though the takeovers would be friendly as all get out to the owners of the firms involved. Why? Because it is all so selfish for managers of companies to serve those who hired them instead of adjacent interested parties who have grown to expect the benefits they bring to the region.

Human beings in all walks of life ought to try to flourish. This includes being considerate, first of all, of their own well being and that of their intimates—family and friends. Then kindness and generosity to deserving strangers in need follow. Last come those we don’t know but who have been hit with some disaster—like a tsunami or hurricane.

The altruistic ideal that our lives must be devoted to others, first of all, is a good case of the “perfect” being the enemy of the good. This standard for proper human behavior—“[of] assuming a duty to relieve the distress and promote the happiness of our fellows....to ... maintain quite simply that a man may and should discount altogether his own pleasure or happiness as such when he is deciding what course of action to pursue,” to quote the philosopher W. G. Maclagan’s characterization of it—is very bad advice. But it sounds good and has been repeated by moralists mainly because it has the ring of sociability about it. Yet it undermines even that, since if one runs oneself to the ground, as in business, there will be no chance of serving anyone’s interest anymore.

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Machan is RC Hoiles Professor of business ethics & free enterprise at the Argyros School of Business & Economics, Chapman University, and a research fellow at the Hoover Institution, Stanford University. He also advises Freedom Communications, Inc., on public policy issues.