Friday, November 18, 2011

Self-Interest is Not Selfishness

James Garvey, editor, writes (17 November) a post in TP Talking Philosophy (founded in 1997 to in 1997 to publish quality philosophy in a readable and enjoyable format for readers both within and outside academe).

“Mad men and Hippies”

Spurred on by the Occupy Movement, I’ve been thinking again about the connection between morality and our economic troubles. I thought I blogged something about it at the start, and it turns out I did, in 2008. Maybe it’s interesting reading again (Ethics Stimulus Package). The idea, dredged up from a few lines owed to Adam Smith, is that we’re sometimes self-interested butchers and bakers (and maybe hedge fund managers), but we’re capable of acts of great selflessness too. Capitalism needs at least a dose of the former to work, but it would seem that it needs at least some of the latter too. I wondered then, and I wonder now, what leads us to ‘exercise our benevolent affections’, as Smith puts it. Some ages feel more in tune with those affections, some times seem better placed to express them. The interesting thing is what drives those changes, what pushes us, back and forth, between Mad Men and hippies, Gordon Gekko and … well, I’m having trouble settling on a contemporary name to set against his, but never mind. What is it, do you think, that makes moral sentiments wax and wane?”

The ‘butcher, brewer, baker’ paragraph is widely misunderstood, including among philosophers. This was not a ‘selfish’ property at work in the act of bargaining. Explicitly it is the opposite!

To persuade the ‘butcher, brewer, baker’ to supply the ingredients of your dinner, Smith advises you, a) not to rely on the tenuous feelings of their benevolence (as if there were unlimited dinners around and everybody was infinitely benevolent), or b) to appeal not to your own self-interest, but to ‘address’ their self love/ self interest. In short, to be other-regarding, not just self-regarding is the necessary quality of Smithian self-interest, a quality ignored by most readers of this passage who centre their attention of the ignorant 'hard' (bully) bargainer who have little experience of read-world bargaining.

A moment’s thought based on many moments observing people engaged in bargaining and persuasion, show the basic good sense of this statement by Smith. Two passionately self-centred bargainers, interested only in their own self-interests, would reach agreement with great difficulty, if at all.

Each self-interested bargainer requires the co-operation of others. The selfish, greedy person (a creation of Ayn Rand, not Adam Smith, and, before Ayn Rand, the creation of Bernard Mandeville, 1724) in failing to persuade others must resort to plunder and violence, or stop eating.

Bargaining is purposeful co-operation, which does not mean that every pair-wise encounter leads to happy bargains, a wholly utopian dream. If sentiments ‘wax and wane’ that is only human. Buyer’s regret and seller’s frustration are normal. But the emergence of market exchanges, from the ’propensity to truck, barter, and exchange’ throughout the long history of human societies from the ‘faculties of reason [Not rationality!] and speech’, took millennia to become common norms, amidst the long history, and longer pre-history, of the various failing and often bloody or tyrannical alternatives, the antipathy of beneficence and benevolence which regarded as major virtues.

Adam Smith’s Moral Sentiments was about an ethical alternative to the ‘bloody or tyrannical’ alternatives, the main roots of which were already present by the mid-18th-century experiences that he observed.

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Blogger airth10 said...

I have been in business for more than 40 years and the 'invisible hand' has been pretty good to me. Sometimes I am amazed how things worked out and I got through it. I would think some of it had to do with luck,

But some will argue that there is no such thing as luck, it's just a metaphor. Nevertheless, it describes a sense one has, like feeling fortunate.

Samuel Goldwyn animated the metaphor of luck when he said, "The harder I work the luckier I get." Any sensible person can understand that. By saying that Goldwyn made the metaphor of luck tangible. And if there is luck we make ourselves, through our activities and how we engage others.

The IH metaphor is also real, although you don't see it. Yet it is like an electric spark that happens between people doing their own thing, going about their business, pursuing their own interests in a responsibly manner. It is incredible how people doing their own thing generates a workable, ingratiating system where the majority benefit. This goings on, for want of a better term, is know as the invisible hand, at work.

2:44 p.m.  

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