Ludwig von Mises Institute of Canada

In its relation to markets, selfishness is a concept with an unfortunate pedigree. This is so not merely because the term itself has accumulated connotations of moral disapproval, but perhaps even more because the standard usage of the term is so confused. Additionally, selfishness, misunderstood as a synonym for greed, has become synonymous in the minds of many with markets: certainly Ayn Rand was never shy about extolling its virtues; Milton Friedman defended it frequently; and, in popular culture, Adam Smith is incorrectly thought to have claimed it as the very foundation of markets. However, all this is itself merely a manifestation of the usage confusion noted above. If we are to make anything sensible out of the use of the term “selfish,” to say nothing of allowing an informed application of the concept – in both its meanings – to markets, the confusion in its widespread misuse must be first cleared up.

To clarify the meaning, and allow for more useful application, of the word selfish at least two very distinct usages need to be distinguished. Not only do these usages not at all signify the same thing, but the thoughtless collapse of these two meanings does considerable harm to any hope for clarity of thought, either on the term itself or in intelligent application of it to markets. On the one hand, selfishness can be taken as referring to self-interest, what for sake of both clarity and accuracy is better identified as “personal preference,” and, on the other hand, it can be taken as occupying one end of a dispositional spectrum at which the other end is altruism. To speak of selfishness, then, as either synonymous with preference or antithetical to altruism, is to speak of two very different phenomena. There is certainly nothing inconsistent with the claim that any particular individual, at any particular time, may well have a preference for altruism. So, the use of “selfish” as stand-ins for each of these concepts leads only to confusion and obfuscation.

Getting a handle on the distinction between these uses of “selfish” may benefit from momentary grappling with another distinction, between uses of the term “scarcity.” A rigorous dissection of the multiple implications in this term would take us too far afield for the purposes of this report. For instance, a thorough treatment would have to distinguish between natural resources and manufactured produce, and between natural resources that were readily measurable (such as oxygen) and those for which the stock levels can never be confidently inventoried because of market innovation incentives (such as oil). For purposes here though let’s keep things simple and merely focus on the distinction relevant to understanding the different uses of “selfish” mentioned above. I’ll call this distinction the one between material scarcity and existential scarcity. Material scarcity refers to the goods we need to live, while existential scarcity refers to life itself.

As long as we’re the kind of animals that we are, living in the kind of world in which we live, scarcity will always be an objective fact of our reality. Abundance is always only relative. There is probably nothing more abundant on this planet of ours, from our perspective, for our purposes, than oxygen. It is so abundant that, under normal conditions, economists pay it no attention. However, anything that is finite is also scarce. The earth’s oxygen could not be consumed at a rate of infinite escalation. It would run out. Understanding that everything is relatively scarce, then, helps us appreciate that there is an important difference between material and existential scarcity. The former is far more elastic than is the latter. We are much more able to reduce relative scarcity of the goods that sustain us than we are able to do so with our actual life-spans. By way of illustration, consider that over the last three thousand years we have seen annual personal income grow by over sixty times – from around $100 to well over $6000. Yet, during that same period, average human life-spans have little more than doubled. It takes far greater material abundance to achieve a more limited existential abundance. There seem to be diminishing rates of return.

It is precisely because material and existential scarcity have differing rates of elasticity that we have to be cautious about our use of the term “selfish.” It is because life is so scarce, and so relatively resistant to growth, that we must inevitably be highly economizing in the use of our time and energy. In this regard, humans are economizing machines. If we think of this matter with calories as our currency, we must have an imbalanced input, compared to output, of calories. If we, say, had perfect balance of calories spent to calories gathered and consumed, this mere replacement rate would lead to our premature death. We have calorie consuming needs – such as metabolism and cellular regeneration – which must be calorie fuelled over and above the calories necessary to actually engage in the productive activity of gaining calorie sources.^[1]From this perspective, it is clear that inefficiency equals death. We have to get back more than we give to remain healthy and alive. It is because of this fact of our evolutionary heritage, part of secular natural law, that humans are constitutionally dedicated to be uncompromising in the economics of existential scarcity. This of course, though, is a very different matter from the amount of material wealth that we might have available from which to obtain those calories. As existential scarcity is so much less elastic than material scarcity its economization cannot be compromised.

With these distinctions understood, it becomes easier to appreciate the distinction between selfish as personal preference and as one end of the altruism-selfishness spectrum. Since our life, the time and energy in which it is measured, is so much scarcer and less-elastic, we are always guided by self-interest; we are uncompromising in this. This is the basis of Mises’ action axiom, in which all human actions are directed to achieving the highest ranked preference of the moment. Of course we can error, we can be misled or mistaken about the actual outcomes of particular actions – “buyer’s remorse” is common enough in all endeavours – but at any moment, any action we take is always directed towards meeting our highest ranked preference at that particular moment, to the degree that we understand the circumstances.^[2]

In that way, all human choice and action are always self-interested. It is for this reason that some have been motivated to characterize humans as existentially selfish. This claim is not false, as long as we are careful to maintain the distinctions made above. Under the conditions that prevailed for most of our specie’s long evolutionary history, existential scarcity was pretty much matched by material scarcity. Thus, our personal preferences closely aligned with getting hold of or hanging onto every possible material advantage for ourselves and our bloodline. This is why hunter and gatherer society was so extraordinarily violent. Material resources were extremely scarce and all other bloodlines and clans were perceived as obstacles to gaining access to those resources. There was very little space for altruism under these conditions, given the existential need.

As we have noted, though, over the last few thousand years, there has been a massive explosion in humanity’s material wealth. While, technically, all such material wealth remains objectivity scarce – and in some areas of this world, still, much more practically scarce – overall the wealth of humanity has increased to staggering degrees. Again, this material wealth has resulted in reduction of existential scarcity, but only on a vastly more modest scale. This growing gap between the extent of existential and material scarcity has served to highlight the practical differences between the two in ways that have been invisible to us for the entirety of our specie’s evolution, save this brief batting of an eye that constitutes the last few thousand years. It is because of this long period of naked hand-to-mouth existence that our brains have not been able to keep up with these sudden changes and still operates with a cognitive framework that instinctively fails to appreciate the differences between these two kinds of scarcity and thus between the different meanings of “selfish.”^[3]

It is precisely because so many of us are today so wealthy in the material goods that sustain life that there is no longer any need to maintain the tight coupling of selfish as personal preference and selfish as the antithesis of altruism that has characterized the vast expanse of our evolutionary existence. Since a preference to momentarily sacrifice some amount of our material wealth no longer threatens existence, altruist personal preferences become possible in ways and to degrees that would have threatened our survival through most of evolutionary history. People can forgo the time and energy to produce materially for themselves and their bloodlines by volunteering their time and effort to train, advise, coach, or care-for others who would never have qualified as clan members throughout the vast expanse of our specie’s history. Indeed, a staggering number of us, to one degree or another, willingly give over parts of our material wealth as donations to support others who are not only strangers, but anonymous strangers that we’ll likely never ever have occasion to meet in person. This kind of altruism is only possible because the elasticity of material scarcity has given us the capacity to separate personal preference from material consumption.

Where the matter can still become complicated is in the failure to recognize, indeed a tangible resistance to admit, that personal preference remains inescapably self-interested. All acts of donation and volunteering constitute material sacrifice, but such sacrifice never changes the inescapable fact that all human actions are still to achieve higher ranked personal preferences. It is merely that reduced material scarcity opens up the options for a wider range of personal preferences than were available under conditions where material scarcity was an immediate and constant threat to existence.

Getting caught up in the question of trying to identify the actual motives behind materially-sacrificing personal preferences seems to be something of a mug’s game. This is especially so when we consider that the individual choosing the preference often doesn’t even know what is the actual motive.^[4] Does someone who sacrifices material accumulation in the donation of time and energy to coach girls’ soccer do it because of a fondness for kids, or soccer, prestige in the community, enjoyment of the success of others, as a way of escaping temptation to destructive or hurtful alternate uses of time and energy, pleasure in mentoring, sublimated erotic fodder, repaying a karmic dept to one’s own past coaches and mentors: the possibilities are almost countless. All that is clear is that whatever the personal benefit that comes from achieving this preference, it is rated as more valuable than any alternative – including, though not restricted to, those that would have increased one’s material wealth.

Our great material wealth has allowed an explicit decoupling of selfishness as personal preference and selfishness as the antithesis of altruism. It has thus provided us many more options for the pursuit of personal preferences. However, given the far reduced elasticity of existential scarcity, compared with material scarcity, our time and energy remains precious in ways that can never be moved by the levels of our nutrition, convenience of our transport or security of our dwellings. Material wealth may give us more options, but we are such animals that a very unforgiving economics guides our use of our scarce time and energy on this mortal coil in the sorting of those options in accordance with our personal preferences. Material selfishness need no longer be the guiding determination of personal preferences, but the selfishness of our personal preferences must remain the guiding determination of our choices and action.

Michael McConkey is an independent scholar, with a Ph.D. from McGill University and many years experience as researcher and educator, who spends his time between Vancouver and Hua Hin, Thailand. He runs the FrFree Market Thinker series and is the author of the recently completed treatise, Voluntary Governance: A Roadmap. He is currently working toward the creation of the Pacific Institute of Voluntary Governance in Vancouver.

Notes:

1. ^[1] For an expanded elaboration of this argument, please see the discussion in “Sustainability as Tragedy?” The Free Market Thinker, vol. 1.2 ↩
2. ^[2] Ludwig von Mises, Human Action: A Treatise on Economics (Auburn, Alabama: Ludwig von Mises Institute, 1998). ↩
3. ^[3] On the lag in our cognitive evolution, compared to our rapidly changing material circumstances, see Michael Shermer, The Mind of the Market (New York: Henry Holt and Co., 2008) and Paul Rubin, “Folk Economics,” Southern Economic Journal, 70(1), 2003. ↩
4. ^[4] It might be worth mentioning here that confusion on this matter is contributed by Mises’ frequent insistence upon defining action as both conscious and purposeful. As I argue in a paper, “Mises’ Lacanian Lacuna,” this is in fact not possible and can lead to erroneous analyses. The paper is available from the author and currently under consideration at Libertarian Papers. ↩

Tags: economics, human action, mises, Selfishness