The key to prosperous societies is the institution of an arrangement whereby members who engage in self-interested behavior often, perhaps even unwittingly, end up advancing the welfare of the rest of the members as well. Often, this happens through mutually advantageous exchange in the marketplace, but this concept can be extended to areas of life where most of us don’t ordinarily think of self-interest as the driving force of action.
Take academia, for example. In the United States, there are legions of public and private universities tasked with the mission of driving knowledge forward and advancing human progress. They are often thought of as benevolent institutions. Professors are employed by these institutions to engage in path-breaking research and to train students in the methods of their respective fields. What motivates them to do so? Suffice it to say that University professors generally don’t come cheap. Salaries of professors at public universities are a matter of public record and can be checked by anyone. For the 2019-2020 academic year, the American Association of University Professors reported that the average salary for a full professor at doctoral institutions was over $160,000 (the number is about $145,000 for public institutions only).
So, University professors get paid for their efforts. So what? Does this mean that they never have good intentions? Certainly not. However, University professors do pursue prestige, professional advancement, and, yes, pecuniary gain in addition to their desire to advance knowledge and mold young minds. The point is that the institutional arrangement provided by the university setting allows largely self-interested actors, professors, to engage in self-serving behavior that simultaneously advances the interest of the public at large.
To drive this point further, let’s look at a historical example: Isaac Newton’s invention of “the calculus.” Although it may be the bane of many a math student’s existence, the calculus has been used in an incalculable number of scientific advancements and innovations that have advanced human progress. What motivated Newton to make such advancements in pure theory? The calculus did not help anyone immediately, other than Newton himself. No one in England ate better the day after the apple fell on Newton’s head. Furthermore, another theorist, Leibniz, discovered the same principles of the calculus at about the same time as Newton. Newton suspected Leibniz of stealing his ideas, but history casts doubt on this accusation.
Newton fought bitterly to maintain that he was the sole inventor of the calculus. Why? If he were committed only to making advancements in scientific thought for its own sake, we wouldn’t expect him to care so much about who got credit (Leibniz, incidentally, was more generous in apportioning credit). Evidently, Newton was also driven by self-interest. The rewards that he reaped from his innovations in theory included such things as holding the Lucasian Chair of Mathematics at Cambridge and his appointment as Master of the Royal Mint. The rewards that we pursue for ourselves need not be in monetary terms only.
Years and years after the calculus was invented, NASA scientists (and teams hired by private billionaires) are using the theories to send rockets into outer space. The calculus has been used in innumerable projects and innovations that advance the general welfare. Its inventor did not necessarily intend for any of those specific projects to happen. The creation of the calculus was the product of intellectual curiosity and self-interested behavior under institutions that allowed its creator to reap substantial rewards for its creation.
Does this mean there is no room for intentionally “doing good”? No, we intentionally attempt to do good for others all the time, and that’s great. Mothers and fathers intentionally keep the best interest of their children at heart not for monetary gain, but out of love. Of course, it is possible to conceive of this behavior as self-interested as well. (As George Mason University economist Walter Williams used to demonstrate in his undergraduate class, love occurs between two persons when the self-satisfaction and happiness of one is a function of the welfare and satisfaction of the other.)
We live in large societies where most people around us are strangers, and we don’t assume that all of them are benevolent individuals who care for us. Those societies that have made the greatest gains in human welfare are those with institutions that permit self-interested individuals to pursue their own ends through specialization in a manner that increases the welfare of others around them either simultaneously or, in the case of Newton and Leibniz, through time.
Giorgio Castiglia is the Program Manager for the Project on Competition at the Mercatus Center, and a PhD student in economics at George Mason University.