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Capitalism, Selfishness, Morality, and Success

February 14, 2011

Capitalism, Selfishness, Morality, and Success

Ha-Joon Chang, an economist at the University of Cambridge, has written a fascinating book titled 23 Things They Don’t Tell You About Capitalism. In it he debunks common myths and conventional wisdom about capitalism, drawing on economic principles and research. One chapter is called “Assume the Worst About People and You Get the Worst.” In it he discusses the power of self-interest in driving capitalist behavior and points out that it’s one of several motivational factors. He examines Adam Smith’s claim that the “market beautifully harnesses the energy of selfish individuals thinking only of themselves to produce social harmony.”

Chang does not deny that self interest is a very powerful motivator. Nor does he overlook unscrupulous business people who may cheat customers. Or that we have all engaged in selfish behavior at work, whether it’s “goofing off” on company time or helping ourselves to supplies. He does, however, identify other human motivators at work and refers to evidence supporting this fact. These motivators include “honesty, self-respect, altruism, love, sympathy, faith, sense of duty, loyalty, and patriotism” among others. These human motivations balance greed and encourage people to conduct business in morally responsible ways, to treat customers fairly, and operate according to a set of values. These temper selfish impulses.

Pure greed is a short term strategy. Competitors who are ethical, treat customers and employees well, are service oriented, deliver value for price paid, and act to build customer loyalty come out ahead over time. The market and customer behavior require it. Otherwise customers will go elsewhere. You may consider this a part of the self-interest equation; however morality and values are embedded in the process. It’s about doing the right thing by the customer, which also increases business returns. This is a form of enlightened self interest. You succeed in business when you help your customers succeed.

These same concepts apply to us as individuals. When we act purely out of self-interest, we may achieve some short term gains. Eventually it catches up to us. People see that we are only interested in personal benefits and not in any greater good or helping others succeed. By helping others and being for others, we achieve greater fulfillment for ourselves.

I see this phenomenon all the time. I see it when youth take some gift money and set up small philanthropic funds from which they make donations to worthy causes. I see it with volunteers who perform innumerable services in our communities. I see it in spontaneous acts of kindness between strangers. I also see it when people extend themselves in small and large ways to make others smile, to brighten their day, or to make their lives just a little bit better. It also shows up when people do the right thing even if it means they give something up. We succeed when we help others succeed.

The returns are not only in the form of personal fulfillment, but also in relationships, reputation, the trust of others, and being seen as a role model.

Like enlightened businesses, we can also enlighten our lives as we help others in their lives in ways both large and small. All of these acts are meaningful. Through our kindness and giving of ourselves we define our humanity and shape our identity. And we get much more from our own lives as a result.

What can you do along these lines today?

Steve Weitzenkorn

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4 Comments leave one →
  1. February 14, 2011 5:57 am

    Just to correct Chang and the orthodox reading of Adam Smith:Smith was never a promoter of a free market. In fact, in the Wealth of Nations he noted his concern over the greed of businessman. His invisible hand theory was never a theory of self-interest or free market but more on homo sociologicous better shown inhis earlier work The Theory of Moral Sentiments.

    Too oftern, Smith is used as the bogeyman man to explain capitalism. He was never a creator of capitalism. A better read into Smith’s meaning comes in Watson, M., 2005,Foundations of International Political Economy,Basingstoke: Palgrave.

    • February 14, 2011 8:04 am

      Thank you for elaborating and further explaining Adam Smith’s theory. I appreciate your interest, adding perspective, and referring us to other resources.

  2. February 14, 2011 9:15 am

    Steve – these are very good points. I think you could turn this idea into a seminar series. The arguments are similar in concept to “Megatrends 2010,” but in my opinion are much better stated.


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