from Selfishness, Greed, and Capitalism by Christopher Snowden

The crucial point is that in a free market it makes no difference whether the entrepreneur is impeccably well- ­intentioned or unashamedly self- serving. Introducing the famous phrase ‘the invisible hand’, Smith (1957: 400) wrote: by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Here are two of Smith’s key lessons. Firstly, that each person can best pursue their own interests by serving the interests of others – there is no need for force or central planning. By pursuing ‘his own gain’, the individual adds value to the economy and benefits his fellow man. The benefits extend to people he has never met and whose company he may not enjoy. The self- interest of the butcher and the brewer makes life easier for those who do not want to slaughter their own livestock and make their own beer. The butcher does not have to go to the trouble of baking his own bread, and the baker can use the profit he makes to buy from the brewer. The profit motive ensures a supply of bread, meat and beer at a lower cost and of a better quality than each worker could provide for himself.

The second lesson is that these mutual benefits come about despite the individual being an unwitting and unconscious player. The profit motive provides incentives for people to do good even when they are not trying to. A selfish and uncharitable entrepreneur can benefit society by meeting the wants and needs of his customers. Indeed, he will have to meet their wants and needs if he is to prosper in business. He may understand the laws of economics or may be totally ignorant, but so long as he labours for himself, he ‘necessarily labours to render the annual revenue of the society as great as he can’ even though he ‘neither intends to promote the public interest, nor knows how much he is promoting it.’ Smith’s great heresy was to show that there is nothing grubby or disreputable about selling at a profit. Friedrich Hayek believed that Smith’s ideas ‘offended a deeply ingrained instinct that man … should aim at doing a visible good to his known fellows (the “neighbour” of the Bible). These are the feelings that still, under the name of “social justice”, govern all socialist demands and easily engage the sympathies of all good men, but which are irreconcilable with the open society to which today all the inhabitants of the West owe the general level of their wealth’ (Hayek 1991: 118). Today, even those critics who concede that capitalism successfully creates growth and prosperity retain their disgust at the mechanism of self- interest that drives it.

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