Adam Smith: Self Interest

Underlying classical economics is Adam Smith’s transformative understanding of trade. Smith argued that self-interest fueled trade–and all human interaction for that matter–and was governed by an invisible hand that you could not see but could see the effects.

Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

There is no doubt that self-interest plays a large part of our decision-making process, but the question that arises is should self-interest play a large part of our decision making process? Theologically self-interest explains our brokenness and our need for grace; this puts me in a strange position for understanding economic thinking.

Before I continue, I must address a pet peeve of mine: prosperity theology. For those who have not encountered this hellish distortion of faith, prosperity theology teaches that God blesses those who are following him…with money or wealth. Conversely, those who are not following him will not be blessed with money or wealth. It is hard for me to believe that Jesus died so that I can be comfortable, a man who traveled the countryside without wealth and taught anyone who would listen before being killed. To argue that God is a capitalist or a communist minimizes his power, mercy, judgment, grace, and love into human conceptions. End rant.

Returning to the idea of self-interest, Thomas Merton speaks to this idea:

To consider persons and events and situations only in the light of their effect upon myself is to live on the doorstep of hell. Selfishness is doomed to frustration, centered as it is upon a lie. To live exclusively for myself, I must make all things bend themselves to my will as if I were a god. But this is impossible. Is there any more cogent indication of my creaturehood than the insufficiency of my own will? For I cannot make the universe obey me. I cannot make other people conform to my own whims and fancies. I cannot make even my own body obey me. When I give it pleasure, it deceives my expectation and and makes me suffer pain. When I give myself what I conceive to be freedom, I deceive myself and find that I am the prisoner of my own blindness and selfishness and insufficiency.

This is why economics makes me uncomfortable; it is not that I do not have the intellectual fortitude to understand economics, it is that its basic premise asks me to put myself first. Underlying this premise is that the accumulation of wealth and stuff is desirable without looking at the human costs of this pursuit. Where does grace exist in a world driven by self-interest? Where is hope? Maybe this is why prosperity theology bothers me so much, but I digress.

Wealth: On Stuff and God

Day three of my economic conference welcomed the beloved demand curve and supply curve. The fundamental assumption of economics is that people need stuff and want stuff; whether these are real needs or wants is not the point, what matters is the desire. Enter the supply and demand curves. Deftly they measure the relationship between price and quantity neatly packaging the equilibrium price–that is the point will supply meets demand perfectly, all things being equal. While it may not seem so, I believe economic thinking is useful. Economic thinking provides a great way to understand certain quantifiable human interactions; trade, time management, education, robots. But economic thinking does not concern itself with the underlying question of why we desire stuff and how human relationships should work. What should be the source of our desires and what should we actually want? Is there really an opportunity cost–the next best thing–that must be paid to spend time with a friend?

Before going to bed tonight I started chapter 2 of Thomas Merton’s No Man is an Island. It is hardly chance that this is what I read:

We are not perfectly free until we live in pure hope. For when our hope is pure, it no longer trusts exclusively in human and visible means, nor rests in any visible end. He who hopes in God trusts God, Whom he never sees, to bring him to the possession of things that are beyond imagination.

When we do not desire the things of this world for their own sake, we become able to see them as they are. We see at once their goodness and their purpose, and we become able to appreciate them as we never have before. As soon as we are free of them, they begin to please us. As soon as we cease to rely on them alone, they are able to serve us. Since we depend neither on the pleasure nor the assistance we get from them, they offer us both pleasure and assistance, at the command of God. For Jesus has said: “Seek first the kingdom of God, and his justice and all these things[that is all that you need for your life on earth] will be given to you besides” (Matthew 6:33).

Supernatural hope is the virtue that strips us of all things in order to give us possession of all things. We do not hope for what we have. Therefore, to live in hope is to live in poverty, having nothing. And yet, if we abandon ourselves to economy of Divine Providence, we have everything we hope for. By faith we know God without seeing Him. By hope we possess God without feeling His presence. If we hope in God, by hope we already possess Him, since hope is a confidence which He creates in our souls as secret evidence that He has taken possession of us. So the soul that hopes in God already belongs to Him,and to belong to Him is the same as to possess Him, since He gives Himself completely to those who give themselves to Him. The only thing faith and hope do not give us is clear vision of Him Whom we possess. We are united to Him in darkness, because we have to hope.

Merton argues that misplacing our hope and desire will only create a hollow existence. The idea of creating something for wealth generation of to fulfill some perceived need misses the point. Our desire and hope is in God and through that we can see the usefulness of stuff, but it is not until we are willing to give up the desire for stuff simply for its own sake. I am not a strong advocate asceticism but Merton is right, in poverty is where we find hope. Why would hope be necessary for someone who fulfills all their wants and needs with stuff? Stuff is measurable; hope is not. Jesus spoke of this in Mark 8:36:

For what shall it profit a man, if he shall gain the whole world, and lose his own soul?

It is not right thinking to focus your desires on stuff no matter how noble your reasoning may be. Often economists argue that those that take the large risks that pay off with money (stuff) have the ability and resources to help thousands of people through philanthropy. Our hope in God stems from our poverty in spirit that is filled by Jesus. In the same way we can provide that hope to others by simply being with them; our philanthropy is not measurable by how many people we can help or how much money we give. We simply share our hope; this is how we nourish our souls

Those of you interested in No Man is an Island check it out: