Freedom in One Lesson

45.

How to Be a Benefactor—
Use the Invisible Hand

When people think of the word “ benefactor,” they tend to envisage charitable giving to help solve problems that beset others. But that image can be misleading: charity may not successfully solve the problem, and the role of a benefactor may involve more than charitable efforts.

In “How to be a Benefactor,” from his 1971 book Then Truth Will Out (Read 1971a), Leonard Read addresses both issues. He emphasizes the information problem that can make it difficult to help others, if not counterproductive, particularly when government, which has only the resources it takes from others to work with, arranges things. Perhaps even more importantly, he argues that by far the greatest benefits do not come from “charitable” acts but self-interested acts coordinated by voluntary exchange— namely, markets. When government interferes—whether to fix problems for citizens or to fund initiatives to “advance the general welfare”—with actions that individuals have mutually agreed on, it undermines by far the greatest mechanism of social coordination available to us.

Because such possibly well-intended but ultimately adverse government interventions continue to grow more common, Read’s incisive views should command careful attention.

When we get it into our heads that other people’s problems are our responsibility to solve, we “rise” to a level of utter incompetence. However good our intention, our meddling makes matters worse rather than better.

. . . Elect me to Congress and I remain as I am, my competence not improved one whit by reason of this change in occupation. . . .

Before considering how we can become true benefactors, that is, how we can soundly discharge our social responsibilities, let’s reflect on the mischief done in the belief that social responsibility requires everybody to solve everybody else’s problems. . . .

Public policy, it seems to me, should be geared to consumer interest—that’s all of us. . . . Men will serve us best in every way—including alleviation of our poverty and so on—when they stick to their own knitting! . . .

John Stuart Mill . . . was among the numerous men to grasp the pursuit of self-interest as an efficacious way of life:

The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it.

Earlier Adam Smith had observed that

. . . by directing that industry in such a manner as its produce may be of the greatest value, [the individual] intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation. . . .

If “to trade for the public good” is at best an affectation, one must then conclude that he should trade for his own good, which is to say that each of us should observe the rules and pursue his own self-interest. Thus will he best serve others and fulfill his social responsibility. . . .

The pursuit of self-interest as one’s objective is not widely applauded. Generally, such action is associated with greed, avarice, selfishness. . . . This only demonstrates the extent of the confusion.

Self-interest is the motivator of human action. . . . In this sense, everyone is self-centered; self-interest is the ultimate given. . . .

[At issue is] how intelligently self-interest is interpreted. For instance, the thief thinks of his interest as best served by stealing from others. This is an interpretation so narrow and antisocial that the more it is pursued, the more is the public good subverted. There are, on the other hand, those who so intelligently interpret their self-interest that they would never think of trying to pursue their own good by depriving others of the same right, or in any way impeding the efforts of others to obtain their own good.

What this amounts to in the final analysis is serving or observing the self-interest of others in order to best serve oneself. This is an interpretation so intelligent that the more it is pursued, the more is the public good served. . . .

The ardent pursuit of self-interest is the way to social felicity or the public good, presuming that individuals are not allowed (by government) or do not allow themselves to act at cross purposes with the freedom of others, thereby damaging their own interests. To my way of thinking, this is the way; and the more powerfully the individual is motivated to pursue his enlightened interests, the better. If this is the right way, then we should not lightly abandon it simply because we find only a few among us who are intelligent interpreters of self-interest. Stick to the right way and concentrate on increasing an enlightened self-interest. This is the only procedure that makes sense. . . .

What are some of these misinterpretations of self-interest? All will agree that theft is wrong. But of the millions who wouldn’t personally steal from any other, what about those who will, without the slightest qualm, get the government to feather their own nests at the expense of others? What, really, is the difference? . . . The list . . . must include every individual who does unto others that which he would not have them do unto him.

And to be included, also, are the muckraking critics of producers who are trying their best to outdo competitors, to profit by best serving consumers. To make “whipping boys” out of those who serve us most efficiently is to display an ignorance of our own interests.

What, then, is the alternative to the pursuit of self-interest? It is that these people who do not even know their own interests should pursue your and my good—the public weal! This is to compound ignorance in society. For, surely, an individual who does not know his own interest cannot remotely know mine, let alone the countless interests of millions.

. . . How best can I become a benefactor to mankind? By assuming my social responsibility. . . .

Number one is to do all in my power not to interfere with the business of others.

[Here and in the next indented block, Read quotes William Graham Sumner’s What Social Classes Owe to Each Other.]

The danger of minding other people’s business is twofold. First, there is the danger that a man may leave his business unattended to; and, second, there is the danger of an impertinent interference with another’s affairs. The “friends of humanity” almost always run into both dangers.

Number two is to mind my own business.

Every man and woman in society has one big duty. That is, to take care of his or her own self. This is a social duty. . . . The duty of making the best of one’s self individually is not a separate thing from the duty of filling one’s place in society . . . and the latter is accomplished when the former is done. . . .

Minding one’s own business is the doctrine of liberty. Admittedly, this has no glamour for the “friends of humanity,” the social architects, the ones who would mind other people’s business. To rule out their masterminding of others is to deny their peculiar pursuit of happiness.

Read draws out the importance of two crucial and interdependent, but generally ignored, problems with government efforts to “do good.” First, government cannot know all the values, preferences, and circumstances necessary to effectively help others, especially when this means improving the quality of thinking, choices, or integrity. Second, when government attempts to act as a benefactor, it actually constricts by far the most important mechanism that benefits others—namely, voluntary social cooperation through free markets. That voluntary social cooperation involves the pursuit of self-interest does not make it any less beneficial to society. Far from it, as Read concludes.

Minding one’s own business . . . serves self by serving others and is a task of a size to fit the individual . . . self-interest in its most intelligent conception, benefaction at its very best.

Read also echoes Adam Smith in “The Invisible Hand,” from his 1975 book Castles in the Air (Read 1975a).

I am obliged to try once more to explain the correlation between freedom and the remarkable outburst of creative energy experienced by the American people.

If freedom is not seen to be the reason for progress, it may be neglected and abandoned as of no value. When that happens, we are beset by all sorts of authoritarian controls, along with shortages and rationing. . . .

The lives of all persons, be they dictocrats or practitioners of the Golden Rule, are identified with self-interest. The differences have to do with how intelligently self-interest is interpreted. The man to whom Adam Smith referred interpreted his self-interest as best served by producing goods or services of the greatest possible value that he might gain the most for himself. In a word, he was minding his own business. . . . He was utterly unaware of anything more—of consequences beyond his own gain.

However, have a look at the man who minds his own business; for certain, he is not minding anyone else’s business. By reason of this fact, no other person is restrained by him. All others, insofar as his actions are concerned, are free men, even though that thought does not occur to him. Just a man tending to his own knitting, oblivious of the beneficial overall effects of such behavior—“led by an invisible hand to promote an end which was no part of his intention.”

The end? Clear as crystal: the freedom of everyone to express his uniqueness and seek his own gain! No restraints—none whatsoever—against the release of creative human energy. It is this end and this alone which has accounted for the American miracle. . . .

[But] invisible freedom is so rarely correlated with human progress. The progress they observe is credited instead to what they can see or feel or hear: coercive gadgetry. . . . Few, indeed, are those who realize that it is the attractive force of invisible freedom that accounts exclusively for whatever progress there is or ever will be. . . .

. . . True, no one can see freedom with his eyes or hear it with his ears. Freedom, in this sense, is invisible. . . .

The other way of seeing? Insight, with which a few are graced and many others could be.

. . . It is achieved, if at all, by reflecting on what one sees when looking under the covers, so to speak, for causal sequences. . . .

However, one does not need to reflect very deeply to see why all progress stems from individuals acting creatively as they freely choose without violating the right of others to do likewise. Merely assess your own life. . . . Adam Smith comments on this:

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

. . . All insights, flashes of intuition, discoveries, inventions are exclusively personal outcroppings; these enlightenments never have been nor can they be the coercive impositions of any other person. Insights are not implants but outgrowths of the inner self.

Freedom, while invisible to the eye that only looks outward, is clearly and easily visible to the eye that can and does see within. Freedom undeniably has the case. What is lacking is the insight. . . .

Freedom is indeed the invisible hand, the magnetic force that draws to the use of each the unique talents of everyone. . . . To the bounties of freedom there is no end.