On self interest

On self interest

By Ryan Patrick Hanley

“Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so.

Or: self-interest is part of human nature, but it’s a self-interest of a very particular sort.

Self-interest drives capitalism. Capitalism’s friends and foes agree on this, even if they agree on nothing else. Ask a defender of capitalism why capitalism is preferable to socialism. You’ll be told that it’s because human beings are naturally self-interested, and that we should live in a system that rewards what is natural to us. Ask one of capitalism’s critics why we should prefer socialism. You’ll be told it’s because capitalism rewards our lowest and most selfish impulses and crowds out higher goods such as justice and equality. Both sides thus seem to agree that the guiding tenet of capitalism is that “greed is good,” as Michael Douglas’s character Gordon Gekko memorably proclaimed in the movie Wall Street.

But what exactly is “self-interest”? Adam Smith has some useful light to shed on the question. Smith himself is often regarded as a champion of self-interest; the Nobel laureate George Stigler once wrote that self-interest is the “granite” upon which Smith’s entire system is built.1 But we have to be careful here. Smith does think self-interest is natural to us. This is clear enough from the quote above, in which he tells us that “every man” is “by nature” first and foremost concerned with “his own care.” In some deep sense then, it’s right to say that he thinks we’re “hardwired” to be self-interested. But it’s also pretty clear that what Smith means by this is very different from what Dr. Stigler and Mr. Gekko are after.

First, look at what Smith thinks self-interest naturally leads us to pursue. The goal of someone driven by natural self-interest, Smith says, is “his own care.” We might make the same point today by saying that such a person is “taking care of herself.” By this we usually mean that such a person takes good care of her health: she eats well, doesn’t drink too much, gets sufficient exercise and sleep, and so on. But that’s exactly what Smith thinks we’re all led by nature first and foremost to do: to attend to our basic needs, and especially the needs of our bodies that we have to satisfy in order to stay alive. He says as much later: “the preservation and healthful state of the body seem to be the objects which Nature first recommends to the care of every individual.”2

The key point here is that our needs are different from our wants. Our body’s needs have been determined by nature, and are limited to specific goods: nourishment, rest, and so forth. Our wants and desires, however, come from somewhere else. Very few people, I suspect, even if they think it’s reasonable to want a Ferrari rather than a Ford, would say that it’s “natural” to want a Ferrari. In any case, and what matters for us, is that Smith’s claim here isn’t that it’s natural to want a Ferrari. The self-interest he thinks natural to us is the self-interest that prompts self-care, rather than the self-interest that Mr. Gekko calls “greed.”

Second, in claiming that self-interest is natural, Smith doesn’t quite come out and say that self-interest is good. Again, going back to Mr. Gekko: his claim isn’t just that greed is natural, but that greed is “good.” Those who say this could mean to say at least two different things. They might mean that greed is useful to society, perhaps insofar as greed-driven consumer behavior stimulates higher productivity and creates a wealthier society. But they might mean that greed is somehow moral or ethical, and that what we often call a vice is really a virtue—as suggested by the title of Ayn Rand’s book The Virtue of Selfishness. Which (if either) position is Smith’s?

There’s a fair amount of evidence that suggests Smith agrees with the first claim. In The Theory of Moral Sentiments (to say nothing of the Wealth of Nations) he tells us that “it is well that nature” has made us self-interested, as it “rouses and keeps in continual motion the industry of mankind.” And this industry, in turn, has real benefits to society as a whole. Specifically, the rich, despite (or maybe because of) “their natural selfishness and rapacity,” in time “divide with the poor” the wealth that their self-interested activity has created. The famous invisible hand enters at this point, with Smith explaining that 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.” In short, the self-interest of some provides all with the “necessaries of life.” Self-interest thus not only advances the individual’s interests, but also advances “the interest of the society.”3

So Smith clearly thinks self-interest is useful. But does he think it’s also good in a moral sense? Here we need to be careful. The short answer is that it depends. It depends in particular on how we go about pursuing our self-interest. Smith later will explicitly say that “regard to our own private happiness and interest” can seem “upon many occasions very laudable principles of action,” and that certain actions driven by “self-interested motives” in fact “deserve the esteem and approbation of every body.”4 But Smith was hardly naïve. He knew quite well that people driven by the hope of attaining “those great objects of self-interest” are often led to act in ways that are “not only unjust but extravagant.”5 So at the very least Smith’s position on the goodness of self-interest is more nuanced than Mr. Gekko’s. Self-interest, he thinks, can be pursued in a moral way. But it can also be (and often is) pursued in an immoral way. A key part of the challenge of living life well consists in understanding the difference between these two ways—a point to which we will return in what follows.

One last point about self-interest deserves mention here. Smith’s quote ends with the claim that every person is “fitter and abler to take care of himself than of any other person.”6 This can be taken in two senses. First, it could be seen as saying that we can each take care of ourselves more effectively than anybody else can take care of us. It could also be read as saying we can each take care of ourselves more effectively than we can take care of other people. Smith himself, I think, agrees with both points. The key idea, here and elsewhere, involves personal responsibility—the notion that we are each our own best caretakers, and that everything goes better when we appreciate that other people are the best caretakers of their own selves as well. This is another point to which we’ll have reason to return. But for now, the main point is that Smith indeed thinks we are naturally self-interested. Yet what he means by this is something very specific, and indeed something much more limited than what we’re often talking about when we talk about self-interest and capitalism today.


This essay is an excerpt from Our Great Purpose: Adam Smith on Living a Better Life by Ryan Patrick Hanley, now available in paperback.

Notes

1. George Stigler, “Smith’s Travels on the Ship of State,” in Essays on Adam Smith, ed. Andrew S. Skinner and Thomas Wilson (Oxford, 1975), 237.

2. Theory of Moral Sentiments, 250.

3. Theory of Moral Sentiments, 214–15.

4. Theory of Moral Sentiments, 357.

5. Theory of Moral Sentiments, 200–201.

6. See also Theory of Moral Sentiments, 258.

About the Author

Ryan Patrick Hanley is professor of political science at Boston College. His books include Adam Smith and the Character of Virtue and Adam Smith: His Life, Thought, and Legacy (Princeton).