MR WONG INVERTS ADAM SMITH'S ADVICE FOR ADDRESSING ONE'S OWN SELF INTERESTS IN TRANSACTIONS WITH OTHER PEOPLE
Speaking at a plenary session at the Global Social Innovators Forum held at Institute of Technical Education College Centre, Mr Wong noted how the economy is built on economist Adam Smith’s principle, where maximising an individual’s interests and profits would see the marketplace work and function better.
“But if you use that principle to organise our society, and if we each go on our self-interests, there would (not be a) common ground to build a society and you will not have a strong and cohesive society,” said Mr Wong.
He added: “The society needs to operate on a different principle. It almost needs to operate on a reverse Adam Smith’s principle — that we need to look after the interests of others first.”
Mr Wong starts from a false premiss. What motivates an individual to engage in actions is not the same as those actions succeeding in making society, either in the ‘market place’ or ‘the society’, ‘function better’. Smith was well aware of the limitations of peoples’ motives and consequences of the actions that follow from them.
Many references in Wealth Of Nations refer to the negative consequences of motivated actions that do not make society ‘function better’. The whole of Book IV is a ‘violent attack’ (Smith’s own phrase) on the motivated actions of ‘merchants and manufacturers that were in his mind, detremental to the the broader interests of society in general and to the individuals affected by them (tarrifs, prohibitions, restrictive legislative devices and government policies, monopolies, low-wage policies, and the ambitions of princes).
Moreover, “maximising an individual’s interests” neglects to consider that an individual can only serve his or her self-interests in concert with others in markets which can only be achieved by that person also serving the self-interests of the others they transact with.
‘Self-centred’ egotists would face a declining number of potential parties to their transactions, even supposing they could find partners willing to transact with them.
This precept of Smith's appears in Paragraphs 2 and 3, Chapter 2, of Book 1, of Wealth Of Nations, where Smith describes the ‘bargaining process’ where he advises persons searching for their dinner from sellers of meat, beer, and bread to address the seller’s (not their own!) self-interests when in pursuit of their own self-interests.
Mr Wong has missed Adam Smith’s central point, which may be understandable because Mr Wong merely repeats modern distortions of Adam Smith’s moral philosophy and political economy.
I would render Adam Smith’s actual policy prescription as: “The society needs to operate on the same principle by operating precisely on Adam Smith’s principle by realising that we best serve our own self-interests by serving the interests of others.”