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All Human Beings — Not Just Capitalists — Are Self-Interested

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10/22/2019

In Why Not Socialism?, G. A. Cohen presents the scenario of a camping trip to highlight the desirability of socialism as the best form of social organization. After outlining a trip where the friends work together to provide food and firewood, rather than engaging in the division of labor and exchanging competitively, Cohen poses his challenge to the reader: “isn’t this, the socialist way, with collective property and planned mutual giving, rather obviously the best way to run a camping trip[?]”1

The purpose of the camping allegory is to reveal his two guiding principles of egalitarianism and community. In reality, both principles relate to egalitarianism — Cohen defines his “egalitarian principle” as “socialist equality of opportunity,” but his community principle demands a distribution of resources that levels the inequalities Cohen admits will emerge between people who enjoy equal opportunities. He contrasts “community reciprocity” with “market reciprocity,” which “motivates productive contribution not on the basis of commitment to one’s fellow human beings and a desire to serve them while being served by them, but on the basis of a cash reward.”2

Implicit in Cohen’s argument is the idea that the perfection of society is possible by crafting social and political institutions designs for human beings as they should be, rather than human beings as they actually exist. Socialism, as a form of economic organization, is not desirable because it would better accommodate human tendencies than market economies; it is desirable because it would impose desired behaviors on humans against their natural tendencies. In sum, Cohen advocates socialism because he believes people should not be self-interested.

Debating Self-Interest in Historical Context

When Thomas Hobbes wrote Leviathan, he triggered a debate over human nature and the role of government. Hobbes was concerned with the negative implications of self-interest, which created a “war of all against all.” He therefore advocated political absolutism — the complete surrendering of individual autonomy to an all-powerful government — to maintain social order and prevent the natural conflicts between men that self-interest engendered.

When John Locke wrote his Two Treatises of Government, he agreed that self-interest was a component of human nature, but the dangers that concerned Hobbes were tempered by man’s natural capacity for reason. Self-interest was but one element of human nature, balanced by the rest.

The debate Hobbes and Locke set in motion was significant, but not because of their ideas of self-interest, which were mere appendages to their larger theories. Rather, the significance is derived from the novelty of debating the legitimacy of government outside the confines of traditional or religious justifications for authority, such as the “divine right of kings.” By looking for a secular justification of government, Hobbes and Locke found it necessary to consider the nature of man. With this consideration, self-interest was taken for granted as inherent in human nature, and disagreement waged over the potential consequences self-interest implied. Importantly, while Thomas Hobbes unequivocally viewed self-interest as socially bad, John Locke’s divergence was not in thinking that self-interest was socially good. More neutrally, he believed that because self-interest is a part of human nature, man has a natural right to act self-interestedly as long as his actions do not infringe on the rights of others.

It would be left to Bernard Mandeville to introduce the idea that self-interest could be socially beneficial. In The Fable of the Bees; or, Private Vices, Public Benefits , Mandeville defends “vice,” which he defines as “everything a man does to gratify any of his appetites without regard to the public.” He contrasts this with “virtue”— “every performance by which a man, contrary to the impulse of nature, tries to benefit others or to conquer his own passions out of a rational wish to be good” (emphasis added). Like Hobbes and Locke, Mandeville accepted that self-interest was natural to man, but he viewed it as socially good; the lesson of his fable was that self-interested actions can still confer social benefits, irrespective of intentions.

It is this view of self-interest that was famously distilled by Adam Smith 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 interest.” Throughout this debate, self-interest was unquestioningly accepted as an inalienable component of man’s nature. Philosophical opinion was merely divided over whether self-interest was socially destructive or productive.

When Smith’s followers combined his economics with moral utilitarianism, there was no longer any need to adopt one value judgment over the other—or, more precisely, there was no need to adopt any specific value judgment at all. Scientific inquiry, in the new field of political economy, only demanded the acceptance of self-interest as a fact. It was a premise necessary to any deductive enterprise aimed at understanding economic behavior.

Because the classical thinkers were specifically concerned with man’s economic activity, though, they adapted the concept of self-interest into an ideal form — the imaginary construction of a one-sided man exclusively concerned with economic accumulation, which they knew was unrealistic, but considered useful for economic theorizing. John Stuart Mill finally offered an explicit expression of this view in his 1836 essay “On the Definition of Political Economy; and on the Method of Investigation Proper to It ”:

Political Economy considers mankind as occupied solely in acquiring and consuming wealth; and aims at showing what is the course of action into which mankind, living in a state of society, would be impelled, if that motive . . . were absolute ruler of all their actions.

Although the Austrian economists — Ludwig von Mises in particular — would criticize ideal forms such as homo economicus as being incompatible with a complete theory of human action, Mill’s construction provided an important step in political economic theory. The utilitarian approach allowed them to avoid the distracting moral discourse that encouraged thinkers to either present self-interest as sweepingly “good” or “bad.” Instead, the new school of economists began thinking about how self-interest directed behavior in specific circumstances.

It was this view of self-interest that gave the most weight to free market theories. The classical economists never advocated capitalism because they believed self-interest was a moral good that capitalism created — this is a caricature of their ideas presented by political opponents. Whether self-interest was a “good” or “bad” part of human nature was unimportant because it is a part of our humanity either way. Instead, the classical economists sought to understand human nature so as to design institutions that facilitated the best social outcomes for human beings as they actually exist.

Socialists Claim Self-Interest Is Unique to Capitalism

This is a foundational difference between pro-market economists and their anti-capitalist opponents. When Karl Marx and Frederick Engels wrote their Communist Manifesto , they did not view self-interest as an immutable characteristic of human nature. They claimed that the “bourgeoisie . . . has left remaining no other nexus between man and man than naked self-interest,” implying that society deterministically dictates whether humans are self-interested or not.

Socialists have held this view ever since. The classical economists saw capitalism as directing human self-interest in the most productive and socially beneficial direction. The socialists, following Marx’s lead, saw self-interest as unique to capitalism. By abandoning capitalism, they could recreate human beings according to their imaginary ideal — the new socialist man.

One of the reasons that free market economists in the twentieth century anticipated the disasters that socialism would bring is because they understood that self-interest can indeed lead to horrible things under certain circumstances. People respond to incentives and they operate under institutional parameters. It is precisely this realistic view of self-interest that allowed economists — often leading advocates of capitalism — to come up with theories that clearly exposed the way self-interested actors could engage in socially detrimental behavior under particular conditions (usually involving state intervention), such as the theories of public choice, regulatory capture, and rent seeking.

The socialists believed that when capitalism was overthrown, man’s self-interest would be replaced by the more noble community interest that Cohen romanticized in Why Not Socialism? Even after the twentieth century saw 100 million peacetime deaths as a result from these ideals, advocates of socialism continue to advocate institutions designed for imaginary conceptions of human beings—humans as the socialists believe we all should be, rather than as we are.

Advocates of capitalism understand, as the classical economists understood centuries ago, that government and social institutions must be designed for the human beings that actually exist — callous self-interest and all.

  • 1. G. A. Cohen, Why Not Socialism? (Princeton, NJ: Princeton University Press, 2009), 10.
  • 2. Cohen, 39.

Chris Calton is a 2018 Mises Institute Research Fellow and an economic historian. He is writer and host of the Historical Controversies podcast.

See also his YouTube channel here.

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