Saturday, August 27, 2011

Advocates Of Capitalism and Rational Self Interest... Smith and Rand

by: Les Carpenter
Rational Nation USA
Birthplace of Independent Conservatism
Liberty -vs- Tyranny

Adam Smith has been caricatured by some as endorsing greed, much as his modern counterpart Ayn Rand has been by today's political left. The truth is neither were advocating a society driven by greed. Rather both advocated a society driven by rational self interest. Which is to say a free and open market economy.

Both Adam Smith and Ayn Rand would likely find the American political, economic, and social system of today anti rational. Rational self interest dictates that not only do you work for prosperity for yourself and family but also for society at large. Individuals, businesses, and government must grow to understand this, and act accordingly if the country is to ever return to economic stability and real national prosperity.

Today corporatism and crony capitalism are systems that benefit the few and often reward the most unworthy. In doing so capitalism, as well as the concept of rational self interest based on ethical behavior is destroyed.

As our government and businesses have become steadily more corrupt and unethical the results are taking a heavy toll on individuals as well as the nation. Like Rome, American government and businesses {as well as many individuals} seem to be unable to grasp the inevitable outcome of our lack of fiscal and moral discipline.

Perhaps Rand had it exactly right when she asked in the title of one of her books... "Philosophy, Who Needs It?"  The answer it would seem is... Everybody.

Given the state of our nation today isn't it becoming clear Americans are following political, governmental,and economic systems that are lacking in rationality and sound ethics?

From Adam Smith Institute:
Self-interest and virtue

Some people wonder how the self-interest that drives Smith’s economic system can be squared with the ‘sympathy’ that drive his ethics. Here is his answer:

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.

In other words, human nature is complex. We are self-interested, but we also like to help others too. Smith’s books are complementary: they show how self-interested human beings can live together peacefully (in the moral sphere) and productively (in the economic).

The Wealth Of Nations is no endorsement of economic greed, as sometimes caricatured. Self-interest may drive the economy, but that is a force for good – provided there is genuinely open competition and no coercion. And it is the poor that economic and social freedom benefits most.

Could it be that the very capitalist system that created the greatest prosperity the world has ever witnessed will ultimately be responsible for its own demise in America? Time to think outside the box and ones comfort zone methinks.


  1. Les, the major problem I have is that the Government, electoral system and Capitalist system we have today is the one the so-called Capitalists want! Poor people have no political power. Money runs our system, so how do the poor influence it?

    Major policy decisions and legislature is crafted by and for the Richest of the Rich.

  2. Great post, RN.

    I'm doing a takeoff on Rational Self Interest tomorrow...

    Adam Smith also wrote works on morals, which he believed were essential for a functional free market.

    Gene: The rich will always have more power. The great leveler is the vote. Each person gets one, no matter how rich or how poor.

    I think a restoration of the rule of law would go a long way towards righting the ship. Our government is pay for play, and that is the problem, not that some are richer than others.

  3. "Adam Smith has been caricatured by some as endorsing greed, much as his modern counterpart Ayn Rand has been by today's political left."


    I know Rand and Smith have been portrayed that way, but most modern liberals know better than that.

    We understand Smith and Rand just as validly as you. You do not personally own the one universal understanding of Smith and Rand.

    We can at least argue within that condition, yes?

    I do not believe Smith or Rand are simply malevolent advocates of greed.

    Most liberals agree with me.

    We have reasonable arguments with Rand's hypotheses - like "rational self-interest." I can think of at least three things wrong with just those three words!

    Objectifying that which is in all essense subjective is insanity.

    I do not nor ever have thought Rand was just a popular sycophant of the rich.

    I figure she was nuts.

    Certainly interesting - an important 20th century figure, for Atlas' sake! ;)

    But the pillars of her philosophy, the notion that you can even identify, let alone balance without acting, "interest" and "rationality" of the "self" which is by definition doomed to the natural evolution of "irrationality" could only produce an illusion - not a real condition.

    Rand did not view the world in a rational or realistic way. She always reminded me of Metternich, just born in the wrong time even more than him.

    Smith is another matter entirely. And yes, he is widely misunderstood - on BOTH the left and right and you know it (it seems to me almost as many people like the notion that Smith "justifies" greed as think he does in the first place).

    I think his educated readers (including we people who appreciate him without suggesting we should directly convert to 18th century economic theories), should discuss his thoughts more often.

    I think Smith would have more in common with me than you think if we really hammered down teh particulars.

    I would love to debate about Smith.

    For instance...

    Smith was religious. The "invisible hand" was actually quite visible to him, in his mind. This is a foundation of his argument.

    Wanna start there?

    I'm not religious, and neither are you.

    How about we take that theory from there? ;)


  4. Rand took the "invisible hand" out of the equation. How about we start there?

    Your belief that "rational self interest" is irrational is in fact irrational in its premise.

    Shall,we start from there?

  5. Okay. We disagree on human nature.

    But how are you differentiating Smith's definition of rational self interest to Rand?

    Smith believed in the power of the Christian spirit to regulate markets. Objectivists believe it is rational self interest. Realists realize in real life not Smith nor Rand are useful to many aspects of modern real life.


  6. It requires a understanding of "rational". IE: devoid of feeling. Based solely on logic, reason and an understanding of reality as it is perceived by the rational and logical mind wth reality as it is, not what ones feelings wish it to be.


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