The selfishness of Adam Smith

​We live in an age where it is accepted that being selfish is very very bad. Everyone should care about other people in society. You should share your toys with the other children and play nicely together.  You should put your neighbour's interests before your own. You should love your friends enough to lay down your life for them. You should be happy to pay higher taxes, so that those poorer than you can have a bit more money.

​What then should we make of Adam Smith's ideas about self-interest? The embarrassing nexus between self-interest and selfishness causes a huge amount of effort to be expended by admirers of Adam Smith's philosophy in trying to explain that actually, he wasn't at all a selfish man and did not spend his entire life trying to persuade other people to be as selfish as possible.

​Perhaps this effort is worthwhile, given that the 'invisible hand' metaphor has acquired a life greater than that of its author, and like all cliches it is open to misinterpretation. Presumably, without all the modern caveats about Mr Smith not being a selfish man, people would assume that the whole point of his 'invisible hand' idea is to say 'each man for himself and devil take the hindmost'. Throw the poor and hungry into the open market with no safeguards, and let them eat cake. In other words, it will be assumed that Smith's main lesson in the Wealth of Nations is: be as selfish as possible, look out for your own interests, and stab your neighbour in the back if it helps you to advance yourself. 

That would admittedly be a rather nasty way to see the world, and so it is understandable that Mr Smith's admirers are so anxious to explain that really, this is not what the Wealth of Nations is about. Smith was actually quite a smart man, we are told, and a philosopher rather than a philistine. Moreover, it's not as if he was a New Yorker or from some other big city where it's ok to have a grasping personality; he was from Kirkcaldy. This proves that he must have been actually a very humane and likeable sort of person, quite humble, and not at all given to encouraging people to be vicious to one another. And so on it goes.

In writing about Adam Smith today it is therefore customary to begin by saying how personable and indeed admirable he was:

The Smith who emerges from this research is not the narrow-minded apologist of self-interest, but a moral philosopher and social scientist with a rich and complex system of thought, an 18th-century scholar of impressive breadth of knowledge and deeply humanistic convictions. 

Lisa Herzog, Inventing the Market, p. 17.

The only problem with the 'Mr Smith was actually a really nice man' modern expositions is that it falls right in with the modern phenomenon known as 'virtue signalling'. This entails making public statements about  concern for the wellbeing of others, and loudly voicing noble and worthy sentiments, as a proxy for one's political views. So people who want to champion various social causes are very pleased to hear how nice Adam Smith was, because obviously this means he would have supported their social causes. This is why we are now informed that actually, Adam Smith was a Rawlsian, a progressive and indeed a Marxist.

​...all taken as evidence that he was no supporter of laissez-faire. Indeed, some have gone so far as to claim that Smith was a proto-Marxist.

James Otteson, 'Adam Smith on Virtue, Prosperity and Justice', 72.

​There's a certain logic to this perspective: if that much energy is expended explaining that Smith wasn't selfish, he cared about the poor, he hated inequality, etc, then yes, he does begin to sound exactly like a Social Justice Warrior:

​Much like many progressive critics of current inequality, like Stiglitz, Krugman, Hacker and Pierson and others, Smith targets rentier practices by the rich and powerful as distorting economic outcomes. And although he strongly criticizes some regulation, I show that it is regulation favoring the rich and powerful that he attacks. The concern with the welfare of the laboring poor is palpable throughout the book. 

​Deborah Boucoyannis, Contrary to popular and academic belief, Adam Smith did not accept inequality as a necessary trade-off for a more prosperous economy.

From this you can reassure yourself that Smith wasn't one of those neoliberals who oppose regulation just because they value freedom - it seems that Smith would be very happy to have more and more regulation, even if it ultimately strangled the market, as long as that regulation was intended to help the poor and was not intended to favour rich conglomerates [editor: with regulation, it's the intentions, not the outcomes, that matter most]. Wow, this is not what you thought the Wealth of Nations was about, is it. Luckily, it has been reinterpreted for you to make Smith's ideas more in keeping with modern tastes. 

Thus, Smithian free market principles are now increasingly buried in the homilies about how nice Adam Smith really was and how he didn't really support free markets even though it sounded like he did, and he didn't really promote self-interest even though he wrote an entire book about the role of self-interest in economics because really he was a great lover of The Poor.

​The Wealth of Nations, we are thus assured, is really a study on how wealth can be redistributed so that it's equal and fair for everyone. The point about redistribution through the market is completely lost in the fulsome joy of discovering that Adam Smith favoured wealth redistribution, just like any self-respecting Marxist. After all, if he favoured redistribution of wealth then surely he'd be happy that we finally figured out a whole raft of tax laws and other punitive measures designed to redistribute the wealth quite nicely? He surely wouldn't be too bothered about the methods involved, as long as The Poor were intended to end up on top. In that way his ideas have been reinterpreted to give a meaning exactly opposite from what he wrote.

It's easy to see why Ayn Rand was keen to avoid that fate. She dealt decisively with the risk of being 'defended' against charges of selfishness to the point where her ideas would be turned inside out, by writing a treatise on The Virtue of Selfishness.

​Of course, she had to begin by defining selfishness, and it could be said that what she described as 'selfishness' is nothing more than Smith's notion of self-interest.

We all want to be concerned with our own interests. After all, you can't follow the edict to love your neighbour as you love yourself, if you don't bother loving yourself in the first place.

​​There can be no doubt, of course, that in the language of the great writers of the eighteenth century it was man's "self-love," or even his "selfish interests," which they represented as the "universal mover," and that by these terms they were referring primarily to a moral attitude, which they thought to be widely prevalent. These terms, however, did not mean egotism in the narrow sense of concern with only the immediate needs of one's proper person. The "self," for which alone people were supposed to care, did as a matter of course include their family and friends; and it would have made no difference to the argument if it had included anything for which people in fact did care.

​Hayek, Individualism True and False.
​

So the notion of self-interest is not by itself controversial. It all depends on what you're being self-interested about, and what outcomes your self-interest leads to. Self-interest in working hard to improve your material conditions, yes. Self-interest in stabbing your neighbour so you can steal his stuff and thereby improve your material conditions, no.

Besides, all natural passions and psychological traits are, from a moral point of view, ambiguous and mixed. Some virtues or affectations, such as benevolence, may come close to being considered an unqualified good, but others, equally natural, although not an unqualified good, are equally necessary.

The worth of any of these passions, principally what Smith calls the unsocial and selfish passions, such as resentment, indignation, and self-love, cannot be determined simply from a description of the passions themselves but only from an account of their appropriateness to specific occasions. For Smith, each passion was distinct, and to redescribe the vast range of human motivation in terms of self-interest obscures its nature.

Self-interest is just one among a whole range of motives, and it varies in its applications.

Pratab Bhanu Mehta, 'Self-Interest and Other Interests', in The Cambridge Companion to Adam Smith, at 248, 249.

If benevolence is close to being an unqualified good in the general perception, then selfishness is close to being an unqualified evil in the sense that most people would not like to be thought of as selfish. Even when they act to protect their own interests or the interests of their family and friends, they find it necessary to announce that they did this 'so nobody else would have to suffer'. It is a way to signal benevolence and concern for Society.

So, given the importance of virtue signalling when it comes to one's motivations, why didn't Ayn Rand just call her book 'The Virtue of Self-Interest'? She would have had less chance of problems that way, specifically less chance of being accused of being an evil witch.

From witnessing the fate that befell Mr Smith - nobody today is thinking about his ideas, they are just debating whether he was for or against selfishness and whether he was really a good man -  you can see that if Ms Rand's decision to embrace the notion of the ego, the self-ish, allows her theory to stand or fall based on its own truth, rather than disintegrate into debates about whether she was a good person.

So by using the word 'selfishness' she achieved a situation where you can either read her work or not, but either way  you wouldn't waste your time accusing her of promoting selfishness. She already grabbed that old 'selfishness' bull by the horns. One thing she most certainly was not, and that is a virtue-signaller. She would have regarded the virtue-signaller as a second-hander, who cares more about whether observers will think he did the right thing, than about whether in fact he did the right thing.

Selfishness — a virtue? Ayn Rand chose this book’s provocative title because she was on a mission to overcome centuries of demonization. “In popular usage,” Rand writes, “the word ‘selfishness’ is a synonym of evil; the image it conjures is of a murderous brute who tramples over piles of corpses to achieve his own ends . . . and pursues nothing but the gratification of the mindless whims of any immediate moment.

“Yet the exact meaning and dictionary definition of the word ‘selfishness’ is: concern with one’s own interests. 

“This concept does not include a moral evaluation; it does not tell us whether concern with one’s own interests is good or evil; nor does it tell us what constitutes man’s actual interests. It is the task of ethics to answer such questions.”

​Selfishness, however, does not mean “doing whatever you please.” Moral principles are not a matter of personal opinion — they are based in the facts of reality, in man’s nature as a rational being, who must think and act successfully in order to live and be happy. Morality’s task is to identify the kinds of action that in fact benefit oneself. These virtues (productivity, independence, integrity, honesty, justice, pride) are all applications of the basic virtue, rationality. Rand’s moral ideal is a life of reason, purpose and self-esteem.

'The Virtue of Selfishness', Novels and Works of Ayn Rand, at Aynrand.org