Altruism, Self-Interest, and the Morality of the Private Sector: An Austrian Approach
Meadowcroft, John, Journal of Markets & Morality
Many scholars--including some otherwise sympathetic to the market--consider altruism and the market to be fundamentally incompatible. A key insight of Austrian economics, however, is that altruistic ends can be best served by utilizing the price signals generated by the market: Market prices offer the most effective means of learning about the needs, values, and preferences of people of whom we have no direct personal knowledge and of ensuring that the benefits of our actions exceed the costs. An appreciation of this insight leads to the conclusion that the private sector is an institutional setting in which altruistic ends can be efficaciously pursued. Two principal objections to this thesis are considered and rejected.
As a university lecturer in the social sciences, I am fortunate to meet many bright young people with a keen interest in public affairs and a strong social conscience. When discussing future career plans with these young people, one hears a familiar refrain: almost all aspire to work in the voluntary or public sectors. Their rejection of the private sector has little to do with the kind of work available within commercial organizations; the scope of government regulation today means that the private sector offers ample opportunity for challenging policy-oriented employment. Rather, their rejection of the private sector is a moral choice. They believe that private sector workers are motivated by profit and pecuniary self-interest, whereas their voluntary and public sector counterparts are motivated by altruism and a public service ethos. Therefore, employment in the voluntary or public sectors is perceived to be the morally correct career path to choose. (1)
This article will show that the perceptions that these young people hold about the motives of those working in the different sectors of the economy mirror (and are no doubt informed by) the considered views of many scholars, including many who would be considered promarket in orientation. However, an appreciation of a key insight of Austrian economics--that price signals are the most effective means of learning about the needs, values, and preferences of other people who are not personally known to us and that without prices we have no way of efficiently allocating resources to meet those needs, values, and preferences--should lead to a reconciliation of altruism and participation in a market economy and to skepticism as to the extent to which altruistic ends can be realized in a nonmarket context.
This introduction will be followed by a discussion of how scholars have understood altruism and self-interest in relation to the motivation of those employed in the different sectors of the economy. It will then present the Austrian argument that it is only by utilizing the price signals generated within a market economy that we can help others of whom we have no direct personal knowledge and ensure that the benefits of our actions exceed the costs. The article will then present the two principal objections to this Austrian argument and show why each should be rejected.
Altruism, Self-Interest, and the Market
Altruism and self-interest are notoriously slippery concepts. The term altruism was first coined in the mid-nineteenth century by the French social theorist Auguste Comte to describe a selfless desire to "vivre pour autrui" or "live for others." For Comte, altruism was a label that implied the positive moral virtue of acts whose principal end was the welfare of others. (2) Today, altruism is usually understood as actions that benefit others at the expense to oneself, whereas self-interest describes actions that are principally intended to achieve self-benefit. (3)
However, scholars who are working in a number of disciplines have challenged the view that a straightforward dichotomy exists between altruism and self-interest. Instead, it is argued that some element of self-benefit can be identified in all seemingly altruistic acts. …