It is the selfish people who end up doing the greatest amount of good. I would prefer to live in a world run by a selfish capitalist than in a world run by a compassionate social servant or a messiah.
This point is well taken. This is indeed the credo of Adam Smith’s Wealth of Nations, where he says we get our lunch not from the benevolence of the butcher, the baker and the brewer – a steak, some bread and some beer – but from their “self-love.” He added that he never saw much good accomplished by those who "professed to trade in the public interest" – like Air India, SAIL or ONGC.
But it was a different Adam Smith in A Theory of Moral Sentiments, who wrote so much about Sympathy. Indeed, this seeming contradiction in his philosophy was dubbed “Das Adam Smith Probleme” in Germany of the 19th century, where Smith was much sneered at – entirely to Germany’s loss. It was only in the principality of Hanover that Adam Smith was translated and studied – because of their connection to the British throne.
Yet, “Das Adam Smith Probleme” is based on a gross misunderstanding of the philosopher. Moral Sentiments was not a book on political economy, but on natural ethics, or natural religion. And yes, as I said yesterday, it is true that the rise of socialism in Britain as elsewhere had much to do with “misplaced sympathy.” In Britain, the Labour Party received wide support from the early 20th century onwards, only because everyone, especially the “intellectuals” (Orwell, Shaw, Wells, the Webbs and all the “Fabians” of the LSE) sympathized with the working classes – and look at the disastrous results. The same happened in Germany, though on a worse scale. Misplaced sympathy created a trade union elite, who were a law unto themselves. The working classes would have been much better off with laissez faire capitalism. This is a lesson we must learn in India today, for our socialism and trade unionism and welfarism have everything to do with the same misplaced sympathy for “The Poor.” This sympathy has been used to our collective disadvantage by selfish politicians and bureaucrats.
However, it is not true that “a world run by selfish capitalists” would be devoid of Sympathy. We have only to read the history of the institution of Lord Mayor of London, the bastion of British “John Bull” capitalism, where the Honourable East India Company was born, to see that these extremely wealthy capitalists – each far richer than their king – bequeathed vast sums to worthy causes. Indeed, it was a tradition that each of them left at least one-third of his estate to charity. This is seen in the career of Dick Whittington, and it is seen right up to the relief sent for the Great Bengal Famine. Even the school in Stratford-upon-Avon where a young William Shakespeare studied was set up by a Lord Mayor, as charity. So was the bridge upon the Avon, which must have been a boon to all the residents of Stratford.
In fact, right up to this day, almost all worthy causes, including, for example, the Ludwig von Mises Institute, are funded by capitalists who earn their keep in markets. Mises was ably supported by the Volcker Fund. There are, of course, capitalists who get it wrong – like the Rockefeller and Ford foundations, but that cannot be helped. I wonder what Bill Gates and Warren Buffet are achieving with their philanthropy, given that the very foundations of Capitalism have been totally eroded in the USSA. Ted Turner, for example, gifted a fortune to the United Nations bureaucracy!
But the point must not be missed: A Capitalist has within himself the power to do good, to channelize his Sympathy for worthy causes. If we do not want The Chacha State to “help the poor,” then we must encourage private philanthropy, private charity hospitals, schools, colleges, academies, and the like. There is no “Das Adam Smith Probleme.”
I also found much to appreciate in these words of Verma:
… I am deeply suspicious of compassionate people. The road to hell is paved with good intentions. All social servants usually end up messing up the lives of the people they want to serve.
Today, social work, social service, aid and charity are run by extremely selfish “professionals.” They serve their own selfish interests. You see them everywhere, thriving on poverty. There is this excellent poem by Ross Coggins titled “The Development Set” that speaks volumes about the criminally selfish self-interest of these types:
Excuse me, friends, I must catch my jet
I’m off to join the Development Set;
My bags are packed, and I’ve had all my shots
I have traveller’s checks and pills for the trots!
The Development Set is bright and noble
Our thoughts are deep and our vision global;
Although we move with the better classes
Our thoughts are always with the masses.
In Sheraton Hotels in scattered nations
We damn multi-national corporations;
Injustice seems easy to protest
In such seething hotbeds of social rest.
We discuss malnutrition over steaks
And plan hunger talks during coffee breaks.
Whether Asian floods or African drought,
We face each issue with open mouth.
We bring in consultants whose circumlocution
Raises difficulties for every solution –
Thus guaranteeing continued good eating
By showing the need for another meeting.
The language of the Development Set
Stretches the English alphabet;
We use swell words like “epigenetic”
“Micro”, “macro”, and “logarithmetic.”
It pleasures us to be esoteric –
It’s so intellectually atmospheric!
And although establishments may be unmoved,
Our vocabularies are much improved.
When the talk gets deep and you’re feeling numb,
You can keep your shame to a minimum:
To show that you, too, are intelligent
Smugly ask, “Is it really development?”
Or say, “That’s fine in practice, but don’t you see:
It doesn’t work out in theory!”
A few may find this incomprehensible,
But most will admire you as deep and sensible.
Development set homes are extremely chic,
Full of carvings, curios, and draped with batik.
Eye-level photographs subtly assure
That your host is at home with the great and the poor.
Enough of these verses – on with the mission!
Our task is as broad as the human condition!
Just pray god the biblical promise is true:
The poor ye shall always have with you.
What we must also understand today is that, just as these “aid workers” are selfish, even more so are the personnel of The State. The founders of “public choice theory,” James Buchanan and Gordon Tullock, have spent their lives demonstrating how Uncle Sam is self-interested. How much worse must Uncle Sham be?
But the self-interest of the Capitalist can only be achieved by serving his customers better. The self-interest of the personnel of The State is achieved only by screwing the people. One works for good things; the other is pure evil. Gordon Tullock's little book, The Vote Motive, proves that this is the motive that is pure evil. On the other hand, the much maligned "profit motive" is totally innocent, seeking only to benefit the customer, as in this old song.
As far as our own Uncle Sham is concerned, I found Niranjan Rajadhayksha’s column in Mint today most noteworthy. Beginning with Friedman’s “Law of Spending,” which showed how government spending (or central planning) is “some people spending other people’s money on other people,” Rajadhakshya presents us with some statistics on Uncle Sham, our Chacha State:
Here are some numbers. Finance minister John Mathai had estimated total revenue of Rs347.50 crore and total expenditure of Rs338.88 crore in 1950-51, leaving a budget surplus of Rs9.62 crore. Finance minister Pranab Mukherjee had in July budgeted for a revenue of Rs6,19,842 crore and expenditure of Rs10,20,838 crore, leaving a fiscal deficit or borrowing requirement of Rs4,00,996 crore.
Let’s work the numbers. Government spending grew 3 percentage points a year faster than India’s gross domestic product at current prices, going by compounded annual growth rates over 59 years. The absolute numbers are truly astonishing: The size of the economy grew 578 times since 1950 while the size of the government’s spending bill grew 3,020 times.
This is pure theft. This is the root of inflationism. This is the selfishness to watch out for.
A world run by Capitalists would be far, far better. Give me a Lord Mayor of London anyday. Incidentally, the Prophet Muhammad, peace be upon him, was a trader, as was his wife, Khadija. Islam is a religion of traders, not soldiers. And they too have their charity – zakat. Sikhs are hardy entrepreneurs, and their gurudwaras have daily langars for the poor.
So there is selfishness, and there is selfishness. And there is sympathy and there is sympathy. What we need today is to clearly see which is good, and which is evil.
Hope you find this post useful, Anoop.