Tuesday, February 5, 2013

Which came first the altruist or the economist?

Unlike the classic example of the chicken and the egg, the question of the altruist and the economist is much more easily answered. A defining part of human evolution was the want to help others. Early humans that acted selflessly, for the greater good of their family, or tribe increased the odds of survival. Humans do not survive well on their own. Therefore altruism is an evolutionary trait that lives on in man. To paraphrase Adam Smith it is a principle in our nature, and we derive nothing but the pleasure in seeing it. This is not necessarily true as we can view unselfishness as an evolutionary advantage. However Smith was an economist, and as such held a more calculated world view. According to Smith an economy can function and prosper without any altruism at play.
            The Invisible hand that guides the economy is the spontaneous alignments of the market. The economy does not exist because society wants it to exist, it does not exist because the government mandates it so, and it does not exist so that people can help one another.  The economy functions on the personal interests of individuals. Tomorrow if everyone became apathetic towards everyone else the economy would still function. People will still go to their jobs, buy groceries, pay their bills. As a people we would be a sorry lot, but our economy would continue to thrive. It is important to note that when I talk about an apathetic society I mean that people do not wish each other good or ill. As Adam Smith states
“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 ...”
The baker will continue to bake, not because he enjoys providing food for his customers, but because he will receive compensation. This is simple enough but we must also consider jobs that seem to rely on altruism. For instance why would anyone join a volunteer firefighting station out of city limits? In an apathetic society there would seemingly be no reason for individuals to risk their lives, or devote their time to such a cause without some sort of payment. The people who used to benefit from volunteer firefighters must now choose to pool their resources to employ firefighters, or save their money and take their chances. If they choose to employ a few firefighters the economy will have benefited as a new sector in that area will have developed. If the town does not decide to compensate the firefighters then those individuals may choose to find a job in town, or spend time with their apathetic family. The takeaway here is that the economy would still function with or without the volunteer fire department. There are so few jobs inspired by Altruism that they can be considered negligible to the economy as a whole.

            Adam Smith wrote that human nature was inherently good. He also wrote that the economy functioned without any need for goodwill. These are not mutually exclusive statements. Two separate book, two separate messages to convey. It is good that we have altruism in our society that shows itself in volunteer fire departments. It is also good that the economy does not need altruism to function. An economy reliant upon good deeds would be short lived indeed.

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