There is a lot of chatter in the media lately on the subject of self interest. A.K.A. greed.
On one side, there are the Objectivists (like me) as well as noted economists (like the late Milton Friedman – view http://www.youtube.com/watch?v=RWsx1X8PV_A). Those in this camp claim that self interest is the motive power that makes a free economy work, in turn delivering the goods and services required for our amazing standard of living.
On the other side, there are those, mostly liberals and socialists, who claim that unrestrained greed is the root of all economic evil. That it is the reason for the income/wealth disparity in America, that it causes evil companies (especially the CEO’s) to cheat and steal from us to satisfy their endless greed.
Which side is right? Both are. Self interest definitely is the motive force of a free economy, yet, in the form of simple greed, it can also destroy a free economy. How can both be true at the same time? Simple. When self interest is enlightened, it is a force for good. When it is not enlightened, i.e. is simple greed, it can be a force for destruction. What is the difference? Let’s analyze:
First, what do we mean by enlightened? Merriam-Webster Online Dictionary defines enlightenment as:
- freed from ignorance and misinformation
- based on full comprehension of the problems involved
In my simple terms, it means understanding things – in the case of self interest, it means understanding the full effects of one’s actions. By contrast, simple greed means acting without any regard to the harm done to others by one’s actions. Let’s try a simple example:
Imagine I own a company that makes a medicine that all people must have in order to say alive. I have a monopoly on this medicine so I can expect a huge market. And, this fits well with my self interest which is to sell as much of my miracle drug as possible, to feed my own profits. There are a couple of ways I might approach my captive marketplace.
First, let’s use the simple greed approach. I charge whatever I can, without regard to the economic damage it does to those who can ill afford my prices, without regard to the many of will die because they simply cannot come up with the money to pay me. What will be the likely result? First, I will get very rich, at least for a while – as will those who invested in my company. Second, I will do obvious damage to the society I am part of. So much that my “customers” are likely to rebel, most likely turning to government to regulate my prices, possibly nationalize my business. In other words, my own greed is very likely to severely limit my business, ergo limiting the income I can make from it and causing my investors to lose part or all of their investments.
Then, lets use the enlightened self interest approach. I charge a price that will cover my development and manufacturing costs and leave me a nice profit. I make arrangements to use some of those profits to help those who can’t really afford my product. What will be the likely result? First, I will get rich, as will those who invested in my company. Those whose lives are extended by my product will be helped — and, because of this extended life, will be around to buy from me for an extended time. Because of the good citizenship my company demonstrates, it is likely to have a long life, continuing to enrich me and my investors while delivering something essential to my customers.
I could have framed my simplistic example any number of ways, but the point would still be the same. The point being that it is the process, the “game” if you prefer, that is important. To have a definite winner or loser means that the “game” has ended. Yet, when the game ends, we are all worse off. Me because of lost income, you because of loss of access to something you want or need. Clearly, it is in all our interests that the “game” go on forever. For this to happen means we all must be motivated to continue the “game”. This happens only when all of the “players” perceive themselves better off for playing the “game” than they would otherwise be. Put in even simpler terms, it means we all stay in the “game” for the simple reason that we want to. That is, that we are free people, exercising our freedom to choose, in a free marketplace.
Which brings us to the definition of enlightened self interest (from Wikipedia):
“Enlightened self-interest is a philosophy in ethics which states that persons who act to further the interests of others (or the interests of the group or groups to which they belong), ultimately serve their own self-interest.”
“In contrast to enlightened self-interest is simple greed or the concept of “unenlightened self-interest”, in which it is argued that when most or all persons act according to their own myopic selfishness, that the group suffers loss as a result of conflict, decreased efficiency because of lack of cooperation, and the increased expense each individual pays for the protection of their own interests. If a typical individual in such a group is selected at random, it is not likely that this person will profit from such a group ethic.
Some individuals might profit, in a material sense, from a philosophy of greed, but it is believed by proponents of enlightened self-interest that these individuals constitute a small minority and that the large majority of persons can expect to experience a net personal loss from a philosophy of simple unenlightened selfishness.
Unenlightened self-interest can result in the tragedy of the commons.”
Well, that was enlightening, was it not? Is it not true that each of us sees examples of both kinds of self interest/greed all around us? And, it is not too extreme to suggest that, for the moment, the greed crowd is winning. But, as discussed above, when the greed crowd starts “winning” this means the “game” is nearing its end.
So, you ask, why is there not more of this enlightened self interest? Because it requires the ability to reason — to take in information and process it with critical thought to come up with rational answers. The celebrated “dumbing down” of America works for just the opposite. Can it be a real surprise that simple greed is becoming the norm? Especially when you stop to consider that your own government is, by far, the greatest practitioner of simple greed the world has ever seen. No, it was not meant to be that way, but that is the way it has become. Because we let it. Us, we the people, we sat on our hind ends, watching meaningless sports and mindless TV shows, while our government was perverted into the atrocity it has become.
I ask again, why is it that a CEO, who genuinely earns say $10 million, a CEO who is instrumental in providing thousands of jobs, is demagogued as a greedy, evil person while a sports star, who can barely sign his/her own name, is paid the same for delivering nothing whatever of value to civilization, squanders it all on drugs, and “bling”, and nobody complains?
I say, get mad, then get educated. (Yes – you. Sure you attended a major university but does that make you actually educated? Think again.)
Tweet This Post