Selfishness is No Virtue

Greg Baldwin, President of VolunteerMatch, writes HERE:

“The Case Foundation: Why Don't People Want To Give?”

“From The Case Foundation”:

“Well, the easy answer is that it's hard to make people give because people don't really want to. The logic is simple and compelling. People don't give because we are by our nature self-interested creatures pursuing our own survival in a competitive world. Adam Smith and Charles Darwin saw us for what we are: a collection of individuals looking to get ahead, not give back.”

Comment
Greg Baldwin has got the wrong end of the stick. Adam Smith wrote in detail (Moral Sentiments, [1759- 1790), the exact opposite of Greg Baldwin’s assertion. There is precious little Smithian morality in selfishness.

Smith’s criticism of Bernard Mandeville (Private Vice, Public Benefit, 1724) is quite specific on selfishness and Greg Baldwin attributes to Adam Smith what Mandeville became notorious for – making a virtue out of selfishness, a theme taken up by Ayn Rand (The Virtue of Selfishness), another person confused with Adam Smith’s diametrically opposed and explicit views about morality. Self interest is not about selfishness.

If everybody tries takes and few give in exchange, commercial society would be impossible. The very act of exchange is about each giving something to the other party which they prefer in place of what they give up to get it.

If everybody expects others to give without them getting something back, we would soon be impoverished. Poverty is the absence of exchange relations; it is not caused by them, Greg.

A Financial Advisor who Understands Adam Smith

Michael Hennigan, Founder and Editor of Finfacts (Ireland) HERE, writes a most encouraging post : ‘The "free market" in these calamitous times’, containing this gem:

“Adam Smith, the father of modern economics, in his 1776 book The Wealth of Nations, identified the importance of individual self-interest, but contrary to what some critics have claimed, his emphasis was that you serve your own self-interest by serving the self-interest of others. It is not what is generally concluded because the last line of the following extract is what is most often quoted, in isolation:

"In civilized society he [man] stands at all times in need of the cooperation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. 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 self-love, and never talk to them of our own necessities but of their advantages."

Comment
Regular readers of Lost Legacy will recognise this familiar quotation from Wealth Of Nations (WN I.ii.2: pp 26-7; Edwin Canaan, 1937 edition, p 14).

Michael Hennigan is absolutely right in his reading of this famous passage. Congratulations.

Adam Smith On Selfishness and Public Spirit

Roland Patrick lets go on Let’s Fly Under the Bridge HERE: with at The Kansan (Thomas Frank: author of ‘What’s the Matter with Kansas?’) with “What's the Matter with Frank?” in a warm debate between them both on the ‘crumbling US infrastructure’ (roads, bridges, and highways).

Roland Patrick states in his piece:

“Well over two centuries ago Adam Smith explained, in Wealth of Nations, how the public got what they needed, and it wasn't usually through 'public service'. It was by appealing to the selfish interests of producers of food, clothing and shelter. i.e., by offering money in return.”

Comment
If your are going to quote from Adam Smith (or, indeed, anybody) you ought to get the quotation correct. Slipping in the word ‘selfish’ before interests is, er, naughty. There is quite a lot of difference between ‘self interest’ and ‘selfish interest’.

You may be selfish as your fancy takes you, but that’s no way to engaged with other people. Selfishness begets selfishness. But in exchange transactions, especially when bargaining for something, Adam Smith made it clear exactly what is involved:

‘But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. 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. 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.’ (WN I.ii.2: p 26-7)

You get what you need, not be being selfish but by interesting their [NOT your] self-love in his [NOT your] favour, and show them that it is for their [NOT your] own advantage to do for him [You] what he [You] requires of them [Him].

It’s a two-way, not a one-way, street. It’s his self-interest you address, not your own. And you do this by using a conditional proposition, ‘If you..Then I’:

“Give me that which I want, and you shall have this which you want”

The important element of bargaining is to convince the other party how and why she benefits from the transaction. You have to be ‘other-centred’, not selfishly self-centred.

Nobody selling you a television would be successful if he told you that you should buy because he, the seller, will be able to afford a new car. The buyer wants to hear what benefits she gets from the deal, not what the seller gets, and the seller should tell her why it is beneficial to her not him for her to agree a purchase.

I am amazed how so many people, supposedly living in the most capitalist market place in the world, never seem to think about the numerous buying and selling transactions they must get involved in and how and why some went better than others. Even supposedly well-trained sales people remain ignorant of the basic principle of sales – link your product to the needs of the buyer, not your needs as a seller.

Adam Smith never recommended selfishness – in fact he criticises selfishness in his earlier book, Moral Sentiments, and repeats his anti-selfish message in the passage quoted above from Wealth Of Nations. And, by the way, contrary to common perceptions, Smith also had some positive things to say about ‘publicly-spirited men’:

“The same principle, the same love of system, the same regard to the beauty of order, of art and contrivance, frequently serves to recommend those institutions which tend to promote the public welfare. When a patriot exerts himself for the improvement of any part of the public police, his conduct does not always arise from pure sympathy with the happiness of those who are to reap the benefit of it. It is not commonly from a fellow-feeling with carriers and waggoners that a public-spirited man encourages the mending of high roads. When the legislature establishes premiums and other encouragements to advance the linen or woollen manufactures, its conduct seldom proceeds from pure sympathy with the wearer of cheap or fine cloth, and much less from that with the manufacturer or merchant. The perfection of police, the extension of trade and manufactures, are noble and magnificent objects. The contemplation of them pleases us, and we are interested in whatever can tend to advance them. They make part of the great system of government, and the wheels of the political machine seem to move with more harmony and ease by means of them. We take pleasure in beholding the perfection of so beautiful and grand a system, and we are uneasy till we remove any obstruction that can in the least disturb or encumber the regularity of its motions. All constitutions of government, however, are valued only in proportion as they tend to promote the happiness of those who live under them. This is their sole use and end.

From a certain spirit of system, however, from a certain love of art and contrivance, we sometimes seem to value the means more than the end, and to be eager to promote the happiness of our fellow-creatures, rather from a view to perfect and improve a certain beautiful and orderly system, than from any immediate sense or feeling of what they either suffer or enjoy. There have been men of the greatest public spirit, who have shown themselves in other respects not very sensible to the feelings of humanity. And on the contrary, there have been men of the greatest humanity, who seem to have been entirely devoid of public spirit. Every man may find in the circle of his acquaintance instances both of the one kind and the other. ….
In the same manner, if you would implant public virtue in the breast of him who seems heedless of the interest of his country, it will often be to no purpose to tell him, what superior advantages the subjects of a well-governed state enjoy; that they are better lodged, that they are better clothed, that they are better fed. These considerations will commonly make no great impression. You will be more likely to persuade, if you describe the great system of public police which procures these advantages, if you explain the connexions and dependencies of its several parts, their mutual subordination to one another, and their general subserviency to the happiness of the society; if you show how this system might be introduced into his own country, what it is that hinders it from taking place there at present, how those obstructions might be removed, and all the several wheels of the machine of government be made to move with more harmony and smoothness, without grating upon one another, or mutually retarding one another's motions. It is scarce possible that a man should listen to a discourse of this kind, and not feel himself animated to some degree of public spirit. He will, at least for the moment, feel some desire to remove those obstructions, and to put into motion so beautiful and so orderly a machine. Nothing tends so much to promote public spirit as the study of politics, of the several systems of civil government, their advantages and disadvantages, of the constitution of our own country, its situation, and interest with regard to foreign nations, its commerce, its defence, the disadvantages it labours under, the dangers to which it may be exposed, how to remove the one, and how to guard against the other. Upon this account political disquisitions, if just, and reasonable, and practicable, are of all the works of speculation the most useful. Even the weakest and the worst of them are not altogether without their utility. They serve at least to animate the public passions of men, and rouse them to seek out the means of promoting the happiness of the society.” (TMS IV.i.11: pp185-6)

This suggests to me that Adam Smith saw some advantages in certain public acts by men of ‘public spirit’ through their drive and enthusiasm for making where they reside a better place than living with a ‘crumbling infrastructure’ and accepting the failings of governments – not markets – with a helplessness born of unsocial and inhumanity for those who have to accept it because they know of no other way of life.

People accept rubbish strewn streets, they are resigned to them; yet the same people could be mobilized by enthusiasm to start cleaning it up and keeping it clean.

In Smith’s time this civic duty was called ‘police’ (not the law and order kind - a later emaning - but cleaning up the streets), and a place was judged clean by the absence of rubbish and sewerage in its streets. Edinburgh’s Old Town was a filthy mess for many years, until some public spirited citizens demanded that the City Officers kept clean what the local people had cleaned up.

Adam Smith Did Not Regard Taxation as 'Evil'

Michel Pireu writes (28 November) in Business Day HERE:

“Laissez faire — the scapegoat of the crisis”

"The name of Scottish philosophy professor Adam Smith has been linked with the cause of economic freedom ever since he published his Inquiry into the Nature and Causes of the Wealth of Nations in 1776."

"He had a lofty view of the importance of the law of supply and demand, believing that it affected far more than the market. “The natural effort of every individual to better his own condition” was the foundation of all political, economic, and moral systems."

In Smith’s view, taxation was essentially an evil: first it was an infringement of liberty: second, it distorted the natural operation of the market."

He believed self-interest could be safely left to serve the common good. “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. In spite of their natural selfishness and rapacity (the rich) are led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made, had the earth been divided into equal portions among all its inhabitants,” Smith declared.

Mainly from Ideas that Changed the World by Felipe Fernandez Armesto”

Comment
Michel Pireu is not quite being fair to Adam Smith and verges on being misleading about his ideas.

Adam Smith never believed that ‘taxation was essentially an evil’; he recognised the need to fund the essential activities of the sovereign state: defence, justice, public works and education (Wealth Of Nations, Book V).

These were essential for the continuation of society and for social harmony within it – without defence the society could be overrun by the depredations of neighbours (‘defence is of much more important than opulence’, WN IV.ii.30: pp 464-5); without justice the society would ‘crumble into atoms’; without public works to facilitate commerce, the society would not reach opulence; and without education, the poor in the society would be exposed to ‘the delusions of enthusiasm and superstition’ (WN V.i.f:61: p 789; Canaan, p 740).

Neither did he consider that taxation “was an infringement of liberty”. He was a strong believer in Natural Liberty as a philosophical approach to human rights for all societies, including those ‘despotical’, from the Natural Law theorists, Grotius, Pufendorf, Carmichael and Hutcheson.

But he considered that as the duties of government were clear, they had to be paid for and his first maxim of taxation was the ‘the subjects ought to contribute towards the support of the government, as near as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state’ (WN V.ii.b.3: p 825; Canaan, p 777)

Now, of course, certain taxes and certain levels of taxation, especially those that breached his maxims, ‘distorted the natural operation of the market’. But this never meant that taxes should be abolished. Indeed, as staunch a supporter of free trade as he was, he was also pragmatic enough to note that even with his overall view, Britain could not become a totally ‘free port’ without some level of tariffs or duties on some goods, because customs duties played such a large part in government revenues.

On self-interest, Michael Pirue (or his sources, Felipe Fernandez Armesto – did Pirue not check his secondary sources before making definitive statements about what Adam Smith actually said?) achieves his alleged quotation from Adam Smith by advertenly running two separate sentences from Moral Sentiments and Wealth Of Nations together without informing the credulous among his readers about what he had done, and thereby giving the wholly false impression that Adam Smith “believed self-interest could be safely left to serve the common good”.

Smith was never so imprudent (silly even) to assert such a thing.

The quotation from Wealth Of Nations about the ‘butcher, the brewer, and the baker’ comes from Wealth Of Nations (WN I.ii.p 26; Canaan, p 14) and the quotation about ‘natural selfishness and rapacity’ comes from Moral Sentiments, IV 1.10: p 184), and was about the delusion of rich landlords, not their exercise of self interest (and it has been discussed on Lost Legacy many, many times).

Adam Smith gave over 70 reasons why self interest cannot be assumed to always benefit societies and those in them in Books I, II, and II, of Wealth Of Nations.

He was not an ideologue; sometimes individuals benefited others (the propensity to exchange) and sometimes they didn’t (monopolists, protectionists, and such like – nowadays, polluters!).

Michael Pireu may want to reconsider the certainties by which he taints the legacy of Adam Smith. All he has to do is read for himself Smith’s works (or read Lost Legacy regularly).

Smith Knew the Differences Between Self Interest and Selfishness

There is much in the media at present that attempts to draw easy conclusions about the causes of the current financial crises, often of a kind that finds the sins of commission in the commercial market system and the virtues of omission in the state sector.

Hardly, a day goes by when we are not lectured on the ‘end of market capitalism’ and its replacement by what amounts to state capitalism. Fair enough, it’s a free country in this constitutional monarchy and in the largest capitalist market economy, the United States of America.

However, the constant drum beat of nonsense about self interest as taught by Adam Smith, frankly is tiresome because it is so untrue that he didn’t know the difference or, worse, ‘changed his mind’ in Wealth Of Nations, that I think it worthwhile to note something he wrote in Moral Sentiments in a discourse on the effects of a supposed earthquake ‘the great empire of China’ and how a ‘man of humanity' might react to an event, then about two years return distance away by sailing ship.

I have quoted the first part of the discussion several times on Lost Legacy, mainly, perhaps in vain, to correct scribblers who draw the absolutely wrong conclusions from it, namely they calim that even a man of humanity would prefer to save his little finger, of immediate, close and personal interest to himself, rather than save the ‘ruin of a 100 millions of his brethren’. Many quote this thought experiment of Smith as if he concludes the triumph of the ‘man of humanity’s’ sselfish elf-interest over millions of earthquake victims.

They are totally wrong. They should have read on:

“When our passive feelings are almost always so sordid and so selfish, how comes it that our active principles should often be so generous and so noble? When we are always so much more deeply affected by whatever concerns ourselves, than by whatever concerns other men; what is it which prompts the generous, upon all occasions, and the mean upon many, to sacrifice their own interests to the greater interests of others? It is not the soft power of humanity, it is not that feeble spark of benevolence which Nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love. It is a stronger power, a more forcible motive, which exerts itself upon such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct. It is he who, whenever we are about to act so as to affect the happiness of others, calls to us, with a voice capable of astonishing the most presumptuous of our passions, that we are but one of the multitude, in no respect better than any other in it; and that when we prefer ourselves so shamefully and so blindly to others, we become the proper objects of resentment, abhorrence, and execration. It is from him only that we learn the real littleness of ourselves, and of whatever relates to ourselves, and the natural misrepresentations of self-love can be corrected only by the eye of this impartial spectator. It is he who shows us the propriety of generosity and the deformity of injustice; the propriety of resigning the greatest interests of our own, for the yet greater interests of others, and the deformity of doing the smallest injury to another, in order to obtain the greatest benefit to ourselves. It is not the love of our neighbour, it is not the love of mankind, which upon many occasions prompts us to the practice of those divine virtues. It is a stronger love, a more powerful affection, which generally takes place upon such occasions; the love of what is honourable and noble, of the grandeur, and dignity, and superiority of our own characters.” [TMS III.3.5: p 137)

Comment
If that is not a final and devastating rebuttal of the ‘selfish greed’ libel against Adam Smith, I don’t know what he could have written in its place.

'Geko’s', ‘greed is good’, outburst slipped in for dramatic affect of a Hollywood script writer did not come from anything that Smith wrote. They expose their ignorance those who claim he did.

They confuse Bernard Mandeville’s satire of [1705-1732] 1924, 'Fable of the Bees, or Private Vices, Public Benefits’, (Oxford University Press) with Smith’s writings from 1744 to 1790 (Mandeville died in 1733; Smith was 10). Now, of course, Smith knew of Mandeville’s writings; he described them as ‘licentious’ in Moral Sentiments (TMS VII.4: pp 306-14).

The piece quoted above from Moral Sentiments is clear and unequivocal.

Get On Your Bikes

Dom Sansom (Suva) writes to the editor of the Soloman Star, the island’s leading Daily Newspaper, 24 October, HERE:

“DEAR EDITOR – If you are worried about the global economic downturn how it may affect us, the father of economics, Adam Smith, (1723-1790) and author of The Wealth of Nations, theorised that the behaviour of rational people is governed by enlightened self-interest.

It’s hard to think of a better example of enlightened self-interest than giving up the car and going by bicycle.

Do that and you’re guaranteed to save a four-figure sum (self interest part) every year while dramatically reducing your carbon footprint and helping the environment (enlightened part) at the same time.

If divorcing the car is a step too far, cycling to work just three days a week could easily save you hundreds of dollars a year, while contributing to your fitness and well-being.”

Comment
But why do readers buy cars in the first place, all imported into the Soloman Islands, along with bicycles too?

Yes, because people can afford them. Adam Smith noted that people had ‘a coach and four’ because they were rich; they weren’t rich because they had a coach and four; and the same with car ownership and bicycle use. They will do what they do because they can or can’t do it (some people who can afford to drive cannot ride a bicycle).

Dom Sansom’s letter, however, is topical; the Island’s Prime Minister, Dr Derek Sikua, is in court charged with driving under the influence of liquor. Perhaps the good Dr will lead the way by taking up his bicycle and save money, reduce his carbon footprint, and save the environment too. More likely, the taxpayer will provide him with a personal driver.

But Dom Sansom is to be congratulated by applying modern economics (though not quite Smithian) to a problem and, with a single policy, addressing several objectives too.