In 1776 in The Wealth of Nations Adam Smith outlined the idea that self interest (or everyone taking care of themselves and their own) would drive an economy to prosperity. This is because no one voluntary enters into a transaction unless it is to their benefit (ie you want those shoes and the sports store wants your money).
He explained that the butcher and the baker provide food for our dinner not because of their generosity, but because of their own self-interests. Smith explained that even in acting selfishly, people are often "led by an invisible hand to promote an end which was no part" of their intentions 1
This is an incredibly robust motor because consistently through history people have had a keen interest in themselves.
Some claim however the dark side of the the invisible hand is that individuals become selfish, looking only after their own wealth. I believe however, critics overlook a principle I call the invisible wrist.
As with the invisible hand people look after their own interests, with the invisible wrist people next turn to the needs of people to whom they have something in common, or to whom they can relate to. It may also be termed alternate self interest, as people feel concern for others whom they feel they are akin to.
These examples are generalities, but are true more often than not :
- people who have lost a loved-one through cancer will often support cures for cancer research
- a mother with a 3 year old will be motivated to help after seeing footage of a toddler maimed in war torn city
- a wealthy inventor donates money to a program for educating young scientists
- we vividly remember when Hurricane Katrina hit in Aug 2005 killing 1,836 people, but how many can recall the earthquake in Yogyakarta that killed 6,234 this year? (May 2006 - it was in Indonesia) 2
Why do we do this? I believe it is because we can put ourselves in their shoes, and can empathise to how they might feel.
But the invisible wrist is also a motor, much like the invisible hand is. It motives people to look after those around them, once they have looked after themselves.
The invisible hand would fail society if individuals were only concerned with accumulating wealth, but we are also creatures of emotion, and most people once they gain an excess for their own physical needs, begin to fill an emotional hole by greater charity to others.
A real beauty of the invisible wrist grows from the diversity of human connections. One person in the city can relate to another of the same religion in the country, an elderly man can relate to a struggling young teenage from the same small home town, a lover of theatre can donate to the development of it. Age, culture, locality, common tragedy or abuse are all potential bridges.
Let us not fear the invisible hand of self interest. Just because the government lets us be free to be selfish, doesn't mean we will be selfish - for attached to the invisible hand is the invisible wrist of alternate self interest.
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Footnotes
1. Adam Smith - Wikiquote http://en.wikiquote.org/wiki/Adam_Smith#Investments_.26_Choice
2. May 2006 Java earthquake - http://en.wikipedia.org/wiki/May_2006_Java_earthquake
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