The virtue of self-interest

This is why the experiments of social engineers who seek to ‘create’ the selfless socialist man or woman always end in unmitigated calamity.

Self-interest defines human conduct, whether individual or collective. To act in one’s own self-interest does not negate the interests of others but enhances them.

To illustrate this, consider the following: when people participate in a lottery, each person wishes to be the sole winner of the main prize. While some may be content with smaller winnings, these would be received as consolation and would not detract from the insatiable desire to monopolise the main prize.

Despite a common drive to advance their own interests, people are different with unique priorities, preferences and tastes. These manifest in their diverse endeavours as they strive to address their aspirations and pursue happiness.

In a television interview with Phil Donohue in 1980, the late economist, Milton Friedman, said “Tell me, is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed?”

In socialist countries greed is monopolised by the nomenklatura or apparatchiki attached to the ruling hierarchy while the rest of the populace languish in mediocrity or destitution. Witness how it manifested during the socialist era, before the implosion of socialist systems with only two of the many privileges being exclusive access to special shops (the special shop in the Kremlin, for instance, supplied the highest ranking members of the Communist Party with the best and most exotic food and drink from around the world, which was denied to the rest of the population), and jobs for the members of the party. The average “ordinary” housewife spent two hours per day, seven days a week, queuing to buy the bare necessities. Privilege for the powerful was the case throughout the socialist bloc and is still the case in countries that are socialist or communist.

A dramatic present day example of this is the economic abyss that exists in Venezuela. The trend is reflected in President Nicolas Maduro’s government conduct, said internationally syndicated columnist Moisés Naím where “The smuggling and selling of food, medicines and all kinds of products [implying privileged and exclusive access to these products] are just a few of the many corrupt activities that enrich the Maduro oligarchy”.

Greed which neither hurts nor is exercised at the expense of others can be termed legitimate greed. In relation to private businesses, this concept can be understood and appreciated when we think of the business as a collective entity made up of two or more individuals. The involvement and contribution of every single individual at every level of the enterprise is propelled by self-interest.

At the helm of this entity are the entrepreneurial individuals who chart the course of the business on several fronts. In their quest to realise ever higher profit margins, they strive to out-compete other businesses in the same industry and might sometimes even consider diversifying, which in turn exposes the enterprise to broader competition. The other important determinant of the competition in which businesses engage is precipitated by consumers who seek only the best value for money as they shop around. Customers are not “loyal” in the sense that they continue to buy at a shop which fails to supply the goods and services they want, at the competitive prices, the quality, and in the friendly and efficient manner to which they are accustomed. If they find a better alternative, they will go elsewhere. In this quest consumers are seldom influenced by appeals to patriotic or other nationalistic sentiments.

On the one hand, the actions of consumers acting in their self-interest, and, on the other, the actions of businesses whose individual human components are also acting in their self-interest, result not in a collision of interests, but in a mutually beneficial transaction with positive outcomes for both sides.

In the economic arena, the pursuit of self-interest leads business enterprises to provide goods and services that people want. The provision of best value for money is in the interest of all. Adam Smith’s metaphor of ‘the invisible hand’ depicts this as the phenomenon whereby producers profit by benefitting their fellow humans without this being the motivation for their business undertaking.

It is indeed a universal phenomenon, though somewhat difficult to comprehend, that, as governments usurp and commandeer the fruits of the labour of wealth-generating people, they do not consider their actions to be greedy, while they accuse those involved in private enterprise of just that sin.

“I have never understood why it is ‘greed’ to want to keep the money you have earned but not greed to want to take somebody else's money,” avers economist Thomas Sowell (Barbarians inside the Gates and Other Controversial Essays).

Legitimate greed advances the socio-economic progress of humans, broadly speaking. But politicians wield the term ‘greed’ with reference to the private sector as an expedient means of scapegoating private enterprise. This deflects attention from the shortcomings or downright failure of their own policies. They also know that the tactic is effective since most people believe them and do not subject their accusations to rigorous scrutiny.

In the final analysis, whether one uses the term ‘self-interest’, ‘legitimate greed’, or just plain greed, the referent is human nature. Greed entails not being content with what one has and thus ever striving for more. This behaviour will always be viewed as negative in the eye of the prejudiced beholder. We should always bear this in mind. We should be conscious that acting in one’s self -interest is a subjective phenomenon. No one else can determine how much is enough for any one individual in terms of material acquisitions because every individual is unique.

That the individual is sovereign is underscored by the Greek philosopher Aristotle (384 – 322 BCE) when he stated, “The most important relationship we can all have is the one you have with yourself, the most important journey you can take is one of self-discovery … Knowing yourself is the beginning of all wisdom.”