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Monday, June 18, 2012

“FOR THE GOOD OF OTHERS” - Leonard E. Read

Foundation of Economic Education


  Leonard E. Read

  A professor writes, “It seems to me that it is quite an unworthy goal for businessmen to go to work for the sake of bringing profit to the stockholders.”

  The head of a large corporation bemoans the bad image of business and contends that the first consideration of American business is, when rightly oriented, the well-being of employees and customers.

  These positions typify a growing, collectivistic sentiment among corporate managers and academicians. Their view, in essence, is that one should go into business for the good of others; profit for the owners is an unworthy objective. A leading American socialist built his utopia around a similar notion: “Production for use and not for profit.”

  I suspect that there are no card-carrying altruists in this world, though there are those who think of themselves as such. “So many people who think they have a tender heart have only a soft mind.”29.1 Anyway, this is to say that there are no selfless persons; there are only those who get selfsatisfaction out of the mistaken idea that they are selfless. Self-satisfaction motivates one as much as another. Some aim for this state of bliss by piling up money, others by minding your and my business, and still others by working “for the good of employees and customers.” The individual who gives his worldly goods to others gets as much thrill from his action as did Midas in his penny pinching.

  We differ from one another, of course, in how intelligently we interpret our self-interest. A Thomas Jefferson, for instance, is intelligent enough to see that his self-interest is best served when he attempts to perfect the society in which it is his lot to live. A pickpocket, on the other hand, thinks his self-interest is best served when he takes great risks for the sake of small gains. The difference between the two cannot be identified as selflessness and selfishness; it is simply a matter of intelligence.

  Persons who get more thrills by “doing good” to others than by improving their own status—intellectual or spiritual or material—are drawn toward socialism which, theoretically, is consistent with and appealing to their manner of thinking.

  Adam Smith, nearly two centuries ago (in The Wealth of Nations), stated what experience seems to confirm:

    I have never known much good done by those who affected to trade for the public good. . . .

    It is only for the sake of profit that any man employs a capital in the support of industry; and he will always, therefore, endeavor to employ it in the support of that industry of which the produce is likely to be of the greatest value. . . .

    He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. . . . By directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it.

    By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. (Italics supplied)

  Let us reduce this debate to manageable proportions and reflect on what, for example, motivates a person to put his savings into a hamburger stand. The answer comes clear: to make as good a living as possible. We know from daily observations that it is the hope of profit, not humanitarian concern about the meatless diet of the population, which is responsible for the venture. Observe, however, that a large profit—the enterpriser’s aim—signifies customer approval. By keeping his eye on his own gain, he assures that others are well served. Their repeated purchases, leading to the enterpriser’s profit, prove this. Imagine how different this situation would be were the hamburger man to concentrate not on his own gain but only on the good of others!

  Of course, to achieve a profit it is necessary that employees be given a wage and working conditions for which they will freely exchange their labor and that people be offered goods or services for which they will willingly exchange their dollars. This is the free market way!

  Humanitarian? Yes, indeed: Assume that a surgeon has discovered how to do a brain surgery, that he can do only one a month that 1,000 persons a year need such an operation if they are to survive. How is the surgeon’s scarce resource to be allocated? Charge whatever price is necessary to adjust supply to demand, say $50,000! “For shame,” some will cry. “Your market system will save only wealthy people.” For the moment, yes. But soon there will be hundreds of surgeons who will acquire the same skill; and, as in the case of the once scarce and expensive “miracle drugs,” the price then will be within the reach of all.

  Look to the improvement of your own position if you would be most considerate of others! And this is sound advice whether one’s business consists of earning profit or doing basic research or practicing medicine or saving souls or whatever. The best charity is to set an example by which others may learn to help themselves.

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