Selfinterest

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The fundamental claim of classical economics was that self-interest is more beneficial to the general advancement of society than good intentions are. As Adam Smith himself put it in The Wealth of Nations: '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 self-love.' Another early economist, David Ricardo, specifically drew the parallel between self-interest and the profit motive. But it was John Stuart Mill who was responsible for the idea of the self-interested rational economic man as the basis for economic development. Mill was heavily influenced by the utilitarian philosophy of Jeremy Bentham, a close friend of his father. Utilitarianism proposed that people do the things which are most likely to bring them the maximum pleasure and avoid the things which are most likely to bring them pain. According to the utilitarians, pleasures did not differ between themselves in kind, but only in strength or intensity. This became an important element of the new science of human behaviour, because it insisted that happiness (or utility) could be measured in a single currency. For the economists, that currency was a monetary one.

Mill himself was profoundly troubled by the implications of the emerging viewpoint. Shortly before he died in 1873, he made a crucial distinction which ought logically—had it come a little earlier—to have sunk the entire enterprise. 'Those only are happy,' he declared in his Autobiography, 'who have their minds fixed on some object other than their own happiness; on the happiness of others, on the improvement of mankind, even on some act or pursuit, followed not as a means but as itself an ideal end.' The implication is clear. The pursuit of the profit motive may deliver wealth. But the pursuit of happiness is unlikely to deliver happiness. Wealth and happiness are different in kind. And the pursuit of profit cannot by its nature be expected to deliver happiness.

These reservations remained on the periphery of the new economics. Instead, economic self-interest emerged as the guiding principle of human development. Its pedigree stretched back in time through Bentham's utilitarianism at least as far as Greek hedonism. And the extension forwards in time of the same philosophical and psychological doctrine reaches well into the twentieth century: for example, through Skinner's behaviourism and Freud's pleasure principle.

Perhaps in the long run, we will have to reject the utilitarian view of human nature if we want to move convincingly beyond the conflicts into which classical economics has led us. On the other hand, we can hardly deny that the doctrine of self-interest is firmly embedded in our cultural traditions. Whatever the deficiencies of classical economics, we cannot entirely dismiss the doctrine of self-interest. As the economist will argue: people do seem to be motivated, at least in part, by self-interest. They do care whether their wages rise or fall. They are concerned about improving their material welfare. Material possessions provide security for themselves and their families. Change and instability frighten and confuse them. Improving their status in life promises stability, provides a sense of progress, and satisfies a desire to leave something behind them for their children. What is more, continues our enlightened utilitarian, a part of that self-interest is a laudable concern for the well-being of one's dependants and descendants. We might even have to admit that self-interest (in this broader sense) underlies our concern about the environment.

And if self-interest is so patently present in the world, should we not attempt to organise society in harmony, rather than in conflict, with it? Even supposing that the narrow view of self-interest incorporated into classical economics is misguided, might there not be a different, and more acceptable, view of our underlying psychology on which to base society? Is self-interest truly served by a narrow pursuit of economic wealth? Is there a version of self-interest flexible enough to accommodate a new vision of human development?

Suddenly, these questions assume increasing importance as we unravel the dynamics of the industrial economy. Answering them comprehensively is really beyond the realm of this book. But we know enough now to hazard a guess at some of the answers a more thorough investigation might uncover.

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