Debating the Role of Self-Interest
By Father John Flynn
ROME, 8 JAN. 2006 (ZENIT)
Economic issues figured prominently among
the end-of-year summaries offered by the media and commentators. The
Christmas frenzy always brings with it concerns over excessive
consumerism, added to which were reflections about inequality and the
need for greater opportunities for developing nations.
Among the many analyses of these issues a couple of recent books are of
interest. The first is "The Moral Ecology of Markets: Assessing Claims
about Markets and Justice," by economist and theologian Daniel Finn.
The market economy is criticized for many shortcomings, but amid this
debate most economists prefer to concentrate on empirical analysis,
leaving aside questions of moral judgments. Nevertheless, Finn observes,
morality forms an ineluctable part of our daily lives.
One problem when it comes to debating the morality of economic issues is
the great variety of positions. The starting points and assumptions vary
widely, according to what part of the political spectrum people occupy.
Finn hopes to achieve in his book a common framework in which to examine
key issues related to the market economy.
He starts by arguing that an adequate analysis of markets, whether it be
from a supportive or critical perspective, must include a consideration
of the moral underpinnings. The most obvious starting point for this is
to look at the concept of self-interest.
Defenders of markets, Finn explained, follow in the footsteps of Adam
Smith, and claim that good results can arise from complex systems of
human interaction even when the individuals are not intending to
generate those good outcomes. Egoism and greed no doubt exist, but
through the mediation of markets, self-interest can work for the good.
Saints or sinners?
The concept of self-interest is not without its critics, continues Finn.
For example, a theory that makes no distinction between a Mother Teresa
and a thief
positing that both are acting to further their respective self-interests
is deficient. A description of the world that cannot distinguish between
vice and virtue, saint or sinner, martyr or murderer, is seriously
lacking in the ability to describe life's realities.
Other critics of self-interest point to problems such as large
inequalities in wealth, and insufficient protection for the weak as
evidence of the limitations of a system based on the pursuit of
self-interest. Critics respond, Finn observes, by arguing that it is
wrong to blame the market for all the evils in our society, which can
stem from a variety of causes and cultural factors.
But defenders of the market face greater difficulties in responding to
the accusation that a system based on self-interest foments greed.
Defenders of the market point to its role in promoting virtues such as
hard work, initiative and creativity, but critics point out that the
utilitarian habit of basing actions on self-interest tends to spread
into all areas of life, eventually undermining the moral standards on
which the market itself depends.
When it comes to economic tasks such as the allocation and distribution
of resources the free market does indeed have many advantages, concludes
Finn. But economic production is just part of our lives and the
application of behavior based on self-interest in other areas can create
Even within the economic realm, acting solely on self-interest can
sometimes not be enough. Finn cites the case of a consumer faced with
the option of choosing between two products, one cheaper than the other
because it is produced in a sweatshop. Self-interest would lead the
consumer to opt for the cheaper product, but if the producer has success
in selling these goods, it could reinforce the existence of exploitative
This leads Finn to conclude that it is wrong to automatically suppose
that it is either always morally wrong or right to act out of
self-interest. The moral evaluation of any action in the market depends
on a series of factors related to the context and the results.
Similarly, when it comes to a judgment of the market itself, Finn points
out that it is not a simple choice between a free market or a
centralized planning system. In practice, markets exist within a complex
system of boundaries, or "fences" as he terms them, regarding their
operation. The decision as to where these fences should be placed varies
widely from situation to situation. In addition, markets exist within a
social, political and cultural context that cannot be ignored.
Another recently published book on the subject of markets is "Adam's
Fallacy: A Guide to Economic Theology," by Duncan Foley, economics
professor at the New School for Social Research.
Like Finn, this author examines in detail the concept of self-interest
in relation to markets, albeit in a more historical and less rigorously
analytical way. The Adam referred to by Foley is Adam Smith, author of
the classic economic text, "The Wealth of Nations."
The fallacy, according to Foley, "lies in the idea that it is possible
to separate an economic sphere of life, in which the pursuit of
self-interest is guided by objective laws to a socially beneficent
outcome, from the rest of social life, in which the pursuit of
self-interest is morally problematic and has to be weighed against other
In his analysis of how markets work, Foley admits that the concept of
pursuing self-interest proposed by Smith has a lot of sense and realism,
but to describe it as a positive good is another question, he argues.
The bulk of the book is then devoted to a synthesis of economic ideas
put forward by a number of economic thinkers in the last couple of
In concluding, Foley comments that Smith himself realized better than
many subsequent economic thinkers the limits of self-interest and the
market. In addition to defending the advantages of a market system,
Smith also recognized the need for political institutions to channel and
control the operations of capital.
Contemporary capitalism is a successful system for the creation of
wealth, but, Foley maintains, it is not some sort of automatic process
inherent in human nature. Economic institutions are fragile and
contingent and need to be shaped and guided. In addition, understanding
how an economy works does not mean we should subsume our moral judgment
to the logic of the market. Economic development brings with it many
changes for society and culture, but the mistake would be to accept all
these changes as something inevitable.
In the spirit of looking to complement and shape the operation of a
market system, the Catholic Church proposes the virtue of charity.
Benedict XVI, in his encyclical "Deus Caritas Est," explained that:
"Building a just social and civil order, wherein each person receives
what is his or her due, is an essential task which every generation must
take up anew" (No. 28).
This is essentially a political task, in which the Church does not play
a direct role, the Pope said. Yet the Church can contribute to this
effort. "She has to play her part through rational argument and she has
to reawaken the spiritual energy without which justice, which always
demands sacrifice, cannot prevail and prosper."
One of arguments put forward by the Church concerns the role of love.
"There is no ordering of the state so just that it can eliminate the
need for a service of love," stated the Pontiff. "Whoever wants to
eliminate love is preparing to eliminate man as such." This is worth
keeping in mind when looking at how markets work. ZE07010823