FREE ESSAY ON SELF-INTEREST IN THE POLITICAL ECONOMY

SELF-INTEREST IN THE POLITICAL ECONOMY

Adam Smith's The Wealth of Nations argues for a system of political economy that separates
economy - the creation and distribution of wealth - from governmental interference. In
Smith's view, the economy of a nation grows as a direct consequence of private business
ventures in the interest of each individual owner. Regulation by the government hurts the
economy, and the progress of society is derived from the flow of the market. Things
should be left in their natural states, thus maintaining a "natural order" of society.
The basis of Smith's thesis is that this natural order is driven by Man's self-interest.
Smith presents the first and arguably most important aspect of social organization based
upon self-interest as the division of labor. He asserts that the division of labor occurs
naturally in society as "the consequence of a certain propensity in human nature …
the propensity to truck, barter, and exchange one thing for another" (21). This
propensity arises from man's "almost constant occasion for the help of his brethren,"
(21) an idea illustrated by the fact that in both Smith's and modern times, the number of
truly self-sufficient individuals are few. This "trucking disposition gives occasion to
the division of labor," and Smith makes the example of a hunter who, in trading arrows
with others, can acquire whatever he needs and will be encouraged to "apply himself to a
particular occupation, and to cultivate and bring to perfection whatever talent …
he may possess for that … business" (23). At this point, Smith is making an
assumption: that men will always choose to do something that will provide them with more
over something that would provide them with less, and it is directly from this assumption
of self-interest that Smith derives his principles of division of labor.
The next aspect of the "natural order" that Smith derives from self-interest is his ideas
concerning the nature of exchange and the theory of value. Smith out rightly declares
that the nature of exchange is a combination between the self-interest of two parties,
that 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 (22)." Smith believes that
exchange takes place when both parties stand to gain, because bargainers "address [each
other], not to [each other's] humanity, but to [each other's] self-love" (22). Similarly,
Smith also bases his theory of value on the assumption that Man will always act in the
manner that allows him to gain the most. Smith defines the value of any product as "equal
to the quantity of labor which it enables him to purchase or command" (36). By this,
Smith is using exchange to define value, and as exchange, according to Smith, is rooted
in self-interest, so value is also.
The final aspect of Smith's system of natural order derived from self-interest is that of
the relations between the laborer, the landlord, and the stockholder. Smith writes, "he
[the stockholder] could have no interest to employ them [laborers], unless he expected
… something more than what was sufficient to replace his stock to him" (46). Here,
Smith has assumed that the stockholder will never have relations with laborers unless
those relations leave him with more than he had to begin with, an action in the interests
of self. This self-driven relationship is identical to the relationship between landlords
and laborers, as the landlords "love to reap where they never sowed, and demand a rent
even for its [the land's] natural produce" (47). Again, Smith is assuming that the
landlords are acting in their own interest, as they would always demand something from
the laborers, even if it is something that is naturally present in the land, one that the
landlord had nothing to do with.
The key assumption that Smith makes throughout The Wealth of Nations is that man has a
natural inclination to act in his own self-interest, and it is from this assumption that
the natural order proposed by Smith comes to bear. However, to what degree one
understands Man's actions as self-interested depends largely upon the degree that one
allows cynicism to color his or her perception of those actions. For example, consider a
man who donates to a charity. On the one hand, economically he gains nothing from this
action, and this action does not contribute to his private opulence, defined by Smith as
"originally derived … [from] the uniform, constant and uninterrupted effort of
every man to better his condition" (205). On the other hand, a more cynical individual
might say that the giver gains some kind of metaphysical or subjective return from this
action that contributes to his self-interest. Smith seems to have little faith in the
natural goodness of Man, writing "it is in vain for [one man] to expect [help] from
[other men's] benevolence only" (22). This pessimistic viewpoint Smith holds might
explain what leads him to see self-interest as the primary factor in the actions of
humanity.
Bibliography
Smith, Adam. Wealth of Nations.