Thursday, April 22, 2010

Intended Good vs. Accidental Good

National Review has done something very fun lately - they are raiding the archives to share a couple of gems each week. Yu can get them by subscribing to the newsletter. (Quick detour: you can also get a daily political fix from Jim Geraghty, and the Goldberg File has returned as a weekly column.)

I've been remiss in discussing this, so let me share a gem from last week: Milton Friedman's essay, Social Responsibility: A Subversive Doctrine.

Now I can already hear some of you gasping, "Subversive? But social responsibility is good! Companies and people do good things in its name!" Hmmph. Basic economics fails to bear out that that is the best way to proceed. I'll let Dr. Friedman speak:

There is no natural harmony between social and private interest — Mandeville and Bastiat to the contrary notwithstanding. But it is possible for an economic, social, and moral framework to exist within which “every individual,” as Adam Smith wrote, “generally neither intends to promote the public interest, nor knows how much he is promoting it. . . . 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 his intention. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it.”

Let me allay a possible misgiving. “Private interests” are not to be taken to coincide with “narrow, material, selfish interests.” The man who devotes his life to religious evangelism under a vow of poverty is pursuing his private interests no less than the man who accumulates money with an eye to wine, women, and song. The pursuit of “private interests” has built churches, universities, research institutions, hospitals, museums — and, yes, movie theaters, beach resorts, athletic stadiums, and the myriads of cars with and without tailfins.

By contrast, said Adam Smith: “I have never known much good done by those who affected to trade for the public good.”
Read it all.