SYSTEMS MATTER Part 8: Self-Interest vs. Selfishness

by Dr. James W. Jackson

Founder, Project C.U.R.E.
Author, The Happiest Man in the World: Life Lessons from a Cultural Economist

When Adam Smith introduced the verbiage of “self-interest” into his economic and cultural reporting he laid himself wide open to misunderstanding, misinterpretation, and criticism.

A person of a different economic ilk, wanting to end all arguments regarding the intent and integrity of Adam Smith, and dismiss him as a greedy scoundrel, would only need to portray him as the champion of selfishness. Such a person needed only to claim, “Smith is the epitome of the bourgeoisie capitalist interested in only grabbing, at any cost, the wealth of this world at the expense of the poor and downtrodden.” The verbal assassination would have pretty much been accomplished at that point.

Instead of indulging in the semantics game, let’s stop and examine just what Adam Smith was saying:

. . .the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty in the attempting to perform, which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and in directing it towards the employments most suitable to the interest of the society. According to the system of natural liberty, the sovereign has only three duties to attend to, three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and thirdly, the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain, because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.(1)

Adam Smith presumes that every person wants to end up better off in life. If left to pursue voluntary transactions of business and barter with other free individuals, the only transactions that will be successfully completed are those transactions where both free trading partners end up better off. A system that promotes that freedom where everybody ends up better off not only encourages additional such transactions but greatly increases the total volume of successful business.

But the human desire to end up better off could be, but is not necessarily, selfish. To possess the desire to make good decisions and end up better off in life displays the admirable qualities of accountability. Good stewardship of life and of those things we possess reveals our willingness to accept and practice personal responsibility. Selfishness is the attitude and spirit where an individual insists on his or her own arbitrary demands on other people regardless of consideration or cost. It is the whole idea of me first . . . it’s all about me. That spirit of selfishness is counterproductive to good business because both parties do not end up better off.

That is why Adam Smith insisted that the government must not be greedy or selfish either. The greedy intentions of the government, or the individuals who control the government, are also counter-productive to the positive growth of an economy, because when they are greedy all parties involved do not end up better off.

Smith tried to build into the system checks and balances to control the selfishness and greed even of the government or Sovereign by saying that their reach and function should be limited to (1) protecting their citizens from outside danger or oppression, (2) the rule of law where the citizens are protected from other individuals within the country, and (3) the establishing and maintaining of certain institutions or services that could not be offered by a single person or a small group of individuals, e.g. courts, recording of public documents, road systems, etc.

The very government itself has the power and opportunity to induce its constituency, by promises of largesse, to believe that the government can exclusively make the citizens better off through receiving favors, grants, and subsidies from it. Those promises are based on a delusion that the government of the nation envisions, generates, and controls all the wealth of that nation, and has the right to distribute that wealth to whomever is willing to totally acquiesce to the government leaders making those promises. The government does not earn any of the money it promises to give away, but, rather, has to take the money away from individuals who have already earned it. Those promises of favors, grants, and subsidies are a form of buying-off the constituents.

When the government promises to take away from those constituents who have earned wealth in order to redistribute that wealth to those who did not earn the wealth, they are appealing to the selfishness of the recipients who would enjoy receiving largesse gained from the efforts of others rather than from their own efforts. A government or Sovereign may have the power to manipulate a model of redistribution through coercion, but, obviously, all the individuals in the deal do not end up better off. At that point the economic model moves into a model of contraction rather than an economic model of growth and production, and over the long haul it cannot remain sustainable.

As we will see later, the free market system depends on the possibility of voluntary and free political and economic choices within the framework of a fair and just rule of law. Throughout history there have been very, very few occasions where cultures and civilizations have experienced the phenomenon of the combination of political and economic freedom at the same time. Great Britain and the United States experienced that kind of exceptional freedom.

The resulting economic system did allow for the observing of what could happen if that political and economic freedom could come together and function successfully. There had never before been such a model created of economic growth, production, and expansion, and to think that the successful experiment had been realized in such a relatively short amount of time.

The exceptional results of the American experiment are largely due to the thinking and writing of several men of common ancestry divided by a large body of water called the Atlantic. They were able to compress, condense, and consolidate the dreams and the desires of the millions of people throughout the centuries who had longed for the opportunity to experience economic and political freedom.

In America, Thomas Jefferson was writing about a new nation that would be the first in history established on the principle that every person is entitled to pursue his or her own values. On the other side of the ocean, Adam Smith was writing about the possibilities of a free market where individuals could pursue their own objectives of voluntary transactions. Both believed that the role of the government should be that of an umpire and not a participant. Each believed that the pursuits of one’s own values and interests were not necessarily greedy or selfish, but necessary for everyone to end up better off.

Those men of creative vision believed that an entire group of people could move forward and achieve the goal of personal as well as national wealth. It was possible to pursue self-interest without being selfish or greedy, and the end result would be a unique model where everybody ended up better off.

 Next Week: Essentials of Free Market
            (Research Ideas from Dr. Jackson's writing project on Cultural Economics)

© Dr. James W. Jackson   

Permissions granted by Winston-Crown Publishing House

  

www.jameswjackson.com  

 Dr. James W. Jackson often describes himself as "The Happiest Man in the World." A successful businessman, award-winning author and humanitarian, Jackson is also a renowned Cultural Economist and international consultant, helping organizations and governments to apply sound economic principals to the transformation of culture so that everyone is "better off."

As the founder of Project C.U.R.E., Dr. Jackson traveled to more than one hundred fifty countries assessing healthcare facilities, meeting with government leaders and "delivering health and hope" in the form of medical supplies and equipment to the world's most needy people. Literally thousands of people are alive today as a direct result of the tireless efforts of Project C.U.R.E.'s staff, volunteers and Dr. Jackson. 

To contact Dr. Jackson, or to book him for an interview or speaking engagement: press@winstoncrown.com

SYSTEMS MATTER Part 5: Investigation into Free Enterprise

by Dr. James W. Jackson

Founder, Project C.U.R.E.
Author, The Happiest Man in the World: Life Lessons from a Cultural Economist

In the year 1776, a unique serendipity occurred that eventually affected the cultural economics of the world. The unusual occasion, however, could never have taken place had King John not signed the Magna Carta at Runnymede, England, in 1215. That proclamation of emancipation for the first time established a constitutional underpinning that the power of the king could be limited by a written document. Historically, that agreement became the cornerstone of freedom and the main line of liberty against arbitrary and unjust treatment of the citizens of a nation state.

In 1776, Thomas Jefferson articulated the Declaration of Independence expressing the general thinking and desires of his countrymen. There would be a new nation formed upon the vision of the Magna Carta, established on the principle that every person is entitled to pursue his or her own values.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights: that among these are Life, Liberty, and the pursuit of Happiness.”(1)

The other component of that 1776 serendipity was the economic masterpiece that was published in Great Britain March 9 of that same year. Adam Smith was a brilliant and energetic professor well trained in the early concepts of economics. Smith was intrigued as he pragmatically viewed the cultures and economics of the different nations of the world. I like to think of Adam Smith as the first ever cultural economist. He was not only concerned about the charts and matrices of the discipline of economics, but was also concerned about people, jobs, human desires, motivations, factories, and systems.

Adam Smith’s intellectual curiosity drove him to seek the answer to a fascinating cultural economic question, Why are some countries rich and other countries poor? He was willing to travel and simply observe and research and then compile and report. He did not just sit back and conjecture or speculate. He did not simply rely on the jaded propaganda of the politicians. He was not trying to figure out an economic and political scheme to control the world.

Smith was not coming from a position, as was Karl Marx, where he felt his true calling in life was to debunk, destroy, and overturn the world as he had found it. Neither was he coming from a position like that of Vladimir Lenin, where he was driven to follow a different path. That path had led Lenin on a sick and vindictive payback scheme for the Czar’s hanging of his brother for the attempted assassination plot. Lenin had vowed to totally destroy, through a Marxist-style uprising, every vestige of Russia’s culture and economic system through total revolution. Adam Smith simply wanted to find out and report the answer as to why some countries were rich and some were poor.

In 1776, Adam Smith’s findings were published in his book An Inquiry into the Nature and Causes of the Wealth of Nations. That book established the Scotsman, Adam Smith, as the father of modern economics. He felt that “The theory that can absorb the greatest number of facts, and persist in doing so, generation after generation, through all changes of opinion and detail, is the one that must rule all observation.”(2)

From their experiences and observations, Adam Smith and Thomas Jefferson were each aware that concentrated government power could be a great danger to the ordinary man. They saw the protection of the citizen from the tyranny of the government as a necessary and perpetual need. Adam Smith observed that “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.”(3)

Based on Smith’s observations regarding the role of government in the affairs of a nation, he concluded that it was “first, the duty of protecting the society from the violence and invasion of other independent societies; second, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, third, the duty to erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain: because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to the great society.”(4)

So, in the nations that were viewed as better off, the functions of the governments were intentionally more restricted to protecting the civilians from enemies from without, protecting the civilians from each other from within, and establishing and maintaining certain public works that could not be offered by limited individuals.

Other principles that emerged from Smith’s observations and recorded in his book were:

• The basic assumption that the prime psychological drive in man as an economic being is the drive of self-interest
• He assumes the existence of a natural order in the universe which makes all the individual strivings for self-interest add up to the social good
• The best program is to leave the economic process severely alone (non-intervention)

One more helpful insight that is gleaned from Smith’s report in the Wealth of Nations is that his definition of real wealth is the annual produce of the land and labor of the society. In other words, he sees production, or the ability to produce income, or the per capita income of a nation, as the determination of the true wealth of that nation. A nation that can produce high levels of income is wealthy. One that is capable of only low levels of income is poor.

But what is it that allows a nation to create a high level of income? Smith declares that the answer to that question is a simple one. The key to a wealthy nation is a productive nation. A productive nation is based on an economic system of individual freedom. The key lies in a system of free enterprise.

Indeed, the serendipity that came together in the year 1776 initiated a glorious experiment in economic and cultural freedom that has expanded the hopes, dreams, and expectations of the pragmatic and spiritual world of culture and economics. What now should we do with this system . . . with this dream?

Next Week: SYSTEMS MATTER: Part 6: A Productive Nation
 

(Research ideas from Dr. Jackson’s new writing project on Cultural Economics)

© Dr. James W. Jackson   

Permissions granted by Winston-Crown Publishing House

  

www.jameswjackson.com

Dr. James W. Jackson often describes himself as "The Happiest Man in the World." A successful businessman, award-winning author and humanitarian, Jackson is also a renowned Cultural Economist and international consultant, helping organizations and governments to apply sound economic principals to the transformation of culture so that everyone is "better off."

As the founder of Project C.U.R.E., Dr. Jackson traveled to more than one hundred fifty countries assessing healthcare facilities, meeting with government leaders and "delivering health and hope" in the form of medical supplies and equipment to the world's most needy people. Literally thousands of people are alive today as a direct result of the tireless efforts of Project C.U.R.E.'s staff, volunteers and Dr. Jackson. 

To contact Dr. Jackson, or to book him for an interview or speaking engagement: press@winstoncrown.com

SYSTEMS MATTER Part 2: Poles Apart

by Dr. James W. Jackson

Founder, Project C.U.R.E.
Author, The Happiest Man in the World: Life Lessons from a Cultural Economist

What is the most efficient method possible to successfully utilize the resources of planet earth in order to meet the needs of the planet’s inhabitants? Each answer will reflect the varied respondent’s world view. Two diametrically opposed views are represented by two different men who lived almost exactly a hundred years apart.

Adam Smith was a well trained and intuitive economist and teacher. He was raised in Scotland and influenced by an agrarian and mercantile culture that operated under the British monarchy. The country also operated under the significant prominence of the Magna Carta.

Until 1215, kings and queens had ruled England with an iron hand. But then, King John’s rebellious barons won from the monarchy a series of concessions that established for the first time a paradigm- shaking, constitutional principle. The signing of the Magna Carta established for the first time that the power of the king could be limited by a written document. It is historically considered the first nationwide emancipation document that became the cornerstone of liberty and the mainline defense against arbitrary and unjust treatment of the citizens.

In his studies, Smith became intrigued with the question “why are some countries rich and other countries poor?” It appeared that some countries experienced relative wealth and others knew only misery and poverty. Why did that difference exist?

Adam Smith’s intellectual curiosity compelled him to travel the world and conduct his research. Perhaps he could discover the reason why some countries were rich and others poor. Currently, most people just abbreviate the title of his book and refer to it as Wealth of Nations. But the true title of his book is An Inquiry into the Nature and Causes of the Wealth of Nations. His work explains what he found to be successful components of economic systems that were producing wealth for their nations and satisfaction for their constituents.

A hundred years later, on the other side of the world, another intellectual was writing. He, too, was writing within the context of his world view. Karl Marx was born in 1818 in Prussian Rhineland. The Marx family was Jewish, but disconnected from their Jewish faith. Karl’s father was appointed a local magistrate a year after his formal conversion to the Evangelical Lutheran Church. Karl Marx received no formal Jewish education, but his Jewish self- consciousness was unavoidable.

Marx’s educational background was eclectic and scattered. The doctoral dissertation that he presented to the University in Jena in 1841 was entitled The Difference between Democritean and Epicurean Philosophies. Young Karl Marx felt his task of philosophical reason was to

“Criticize whatever exists, whether in social institutions, religious doctrines, or the realm of ideas, for what exists is limited, always incompletely rational, and politically open, illusions, self deceptions, group delusions, plain factual errors were to be exposed, the incompletely rational, the spurious, and the idolatrous would be recognized, and partly by being known, righted .”

Philosophy, for Marx “turns itself against the world that it finds.” In 1842 he became first a contributor, then the editor of a politically extreme newspaper in Cologne, where he met Friedrick Engles, the son of a wealthy fabric manufacturer and merchant. A year later they moved to Paris and aligned themselves with French radicals and communists. In 1849 he was deported from France and moved to London.

Except for the brief time with the radical newspaper, Marx was unemployed and earned no money to support his family. For the rest of his life, Friedrick Engles had to give Karl Marx money to keep him in housing, clothes, food, and necessities for his family. In 1848, they together wrote Manifesto of the Communist Party, and in 1867 Marx wrote Das Kapital. The following is an example of Marx’s views regarding free market capitalism: 

''The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his ‘natural superiors’, and has left remaining no other nexus between man and man than naked self-interest, than callous ‘cash payment.’ It has drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom — Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.''

Karl Marx spent his lifetime fully expecting that the masses of the world were going to suddenly and violently rise up at any time and completely abolish all elements of freedom, capitalism, and free trade in exchange for the redistribution of the wealth that they had not earned but could now suddenly possess by murder and brute force.

Even though the rhetoric continually emphasized that the governance of the proletariat would be carried out by the masses of the workers themselves, at the top there was never any question that a small group of elite thinkers and philosophers, the politburo, would be in total control of determining just how equal all the “equals” would be. Marx’s claim was that “the class struggle necessarily leads to the dictatorship of the proletariat.”

The most important principle of communism is that everyone is one and no private ownership of property or production is allowed. Previously accumulated wealth, property, and all means of production, as well as all wealth flowing from future production, is to be held by everyone and distributed to everyone equally, “from each according to his abilities, and to each according to his need.”

Additionally, under communism there is an abolition of all rights of inheritance; emigrants and rebels lose all property rights; all procedures of banking and credit are centralized and owned by the state, as well as are all means of transportation, communication, and education. Each person voluntarily submits to the state to determine occupation, education, residence, and lifestyle. Religion is outlawed and resistance to the state is punishable by death.

But there was always the enduring confidence promoted that through communism’s economic and political system of equality, protection, fatherly care, and provision for everyone, there would be lasting personal peace and sufficiency forever.

Next Week: Investigating Free Enterprise

              (Research ideas from Dr. Jackson’s new writing project on Cultural Economics)

© Dr. James W. Jackson  

Permissions granted by Winston-Crown Publishing House

www.drjameswjackson.com 

Dr. James W. Jackson often describes himself as "The Happiest Man in the World." A successful businessman, award-winning author and humanitarian, Jackson is also a renowned Cultural Economist and international consultant, helping organizations and governments to apply sound economic principals to the transformation of culture so that everyone is "better off."

As the founder of Project C.U.R.E., Dr. Jackson traveled to more than one hundred fifty countries assessing healthcare facilities, meeting with government leaders and "delivering health and hope" in the form of medical supplies and equipment to the world's most needy people. Literally thousands of people are alive today as a direct result of the tireless efforts of Project C.U.R.E.'s staff, volunteers and Dr. Jackson. 

To contact Dr. Jackson, or to book him for an interview or speaking engagement: press@winstoncrown.com