Posts filed under ‘Economics’
My recent musings on selfishness (here and here) have reminded me of Adam Smith (1723-1790) and his economic theory. Although I don’t think that he, himself, characterized his theory like that, his thought has sometimes been summarized by saying that “private vice is public virtue,” meaning that the selfish motivation of individuals actually benefits society at large because it creates competition and therefore better services.
But like in my previous posts, here, too, I would argue that the word “selfishness” is inappropriate. Legitimate self-interest can be a public virtue, yes, but not selfishness. It is not selfish of the baker to want to make a living by selling his baked goods. Sure, he probably does not sell it out of altruistic motives; he sells his because he wants to survive and to take care of his family or other dependants, if he has any. He acts out of a legitimate self-interest, and as a by-product he also happens to feed other people.
My inclination is to distinguish this kind of self-interest, which is indeed the driving force of the economy, from selfishness, which is ultimately destructive for society. For instance, if a CEO makes several hundred times what his average employee makes, well, I think that would qualify as selfishness. Even an economic libertarian like Friedrich von Hayek, whose Road to Serfdom I read the other day, would probably get a heart attack if he heard some of the current ratios between the incomes of CEOs and normal workers.
A thorny issue related to selfishness versus legitimate self-interest is when you make a product that is actually harmful for the consumer. Many products in modern society entail risks or have certain harmful effects, such as cars, which carry a pretty high risk of leading to injury or even death and are rather harmful for the environment. And yet, would we call a car manufacturer selfish for creating a partially harmful product?
Still, there are cases in which the case is pretty clear-cut: aggressively marketing junk food to young children, forcing China into accepting your opium (or, nowadays, taking advantage of the legal situation in China to try hard to get Chinese people addicted to tobacco, even after everything we know about the effects of smoking by now), or using cheap labor from countries with insufficient labor-protection laws—those are the kinds of selfish behaviors that go beyond legitimate self-interest and are ultimately destructive for society.
So, I would not say that “private vice is a public virtue,” but “private self-interest can be a public virtue.” Even in terms of economics, selfishness remains a vice that can be a very destructive force.
P.S.: I chose the example of tobacco marketing in China carefully; I do not mean that states should outlaw smoking completely. Even when it comes to producing cigarettes, the issue of selfishness versus legitimate self-interest is not an easy one; see the movie Thank You for Smoking to illustrate the point.
In my last post, I talked about democracy and free-market capitalism. But though I am not uninterested in political systems and economics as such, I am even more interested in the psychological effects of different political and economic systems.
Free-market capitalism has undoubtedly achieved much and continues to do so. Even issues like the environment might ultimately be better solved by a (more or less) free market than any alternative system. At least I’m open to the idea. But what of the human psyche? Does a consumer culture have ill effects on a psychological level?
Some noteworthy psychologists have thematized this. I am thinking, for instance, of Erich Fromm, who talked a lot about the contrast between “having” and “being,” and he asks whether the “having” culture of capitalism produces psychologically healthy individuals. People, according to Fromm, do not exist as independent individuals within a societal framework. Rather, their characters are molded by the socio-economic structure, and it is possible, says Fromm, for that whole structure to be psychologically unhealthy. In the case of capitalism, he believed that it produces a “manipulated personality” that is estranged from the world, from others, and from itself. (See, for instance, Fromm’s book The Sane Society.)
What do you think? Is free-market capitalism better at producing material advances than psychological well-being? Are there inevitable ill effects of capitalism on the human psyche?