I don’t agree with the attempt to distinguish between self-interest and selfishness, or that Jesus was truly appealing to self interest in those passages. But I agree with something you said later on: Economics isn’t intended to suggest that people *should* be selfish. It instead merely assumes that people *are* self-interested (which is obviously true), and works out the implications of that. In fact, part of the goal of economics is to find ways to get individuals to internalize benefits/costs to others. Which sounds somewhat like the Golden Rule.

Yesterday, Salon ran an “interview” with Adam Smith: http://www.salon.com/opinion/feature/2009/10/06/adam_smith/ which included the following quote:
The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit of a remedy. But the mean rapacity, the monopolizing spirit of merchants and manufacturers, who neither are, nor ought to be, the rulers of mankind, though it cannot perhaps be corrected may very easily be prevented from disturbing the tranquility of anybody but themselves.
I agree with your definition of self-interest. My problem is that I do not believe there’s a consensus around the Christian definition and that the understanding of the term self-interest, especially for the “merchants and manufacturers” at the top of the heap is more again to what Smith (or you or I) would call “mean rapacity.” The more we as a culture understand self-interest as “no man is an island” and care for my brother/sister, yes, the better off we are, but how do we prevent the merchants and manufacturers from tipping into rapacity and a “monopolizing” spirit?

I don’t think you’re off the mark at all on this one. People rarely think about etymology and how words change over time. And I while having hundreds of thousands of words to express what we desire can be helpful, when we don’t know what they all mean to writers from the past, that can be quite destructive for our understanding.
It seems to me that the old notion that everything about people is sinful is rearing it’s ugly head again. If people as a whole, regardless of their salvific state, maintained a healthy balance between energy spent on activities that benefited themselves, others, and God, then I don’t think evangelicals and others would have demonized our tendency towards self-motivated actions. It seems that when there is a common flaw in people, it becomes hard for us to really visualize what a healthy balance would look like. I know I find myself thinking about the amount of time I spend on each of these, and feeling like my system is often off, yet I bet if I lived in a place where this issue was healthy, I would fit right in.
Yet when we encounter, as a culture, endemic problems with a certain portion of our society, namely lenders and investment bankers, that have had such a monumental impact on our common existence, it certainly begs the question of how we ever got here.
I’m sure there are many implications for missional Christians, but I imagine the clearest is to make sure we understand the words we are using and their semantic range, as far as our culture goes, as best we can. I wouldn’t be surprised if this is one of the reasons why Jesus used so many parables compared to other NT writers. He knew that a parable would take the hearer into a visual world that worked with, not against, worldly constructs such as time, sociology, economics, etc. The implication for me is to try to be aware of how what I’m saying is being perceived, while making sure vague or ambiguous concepts are clarified. Or perhaps I could just tell a parable…

It sounds like you are saying that if I decide to buy food for homeless people with 90% of my income, that this would be “self-interest.” This is purposive behavior, after all. If this is what you are saying, then I would suggest that “self-interest” is not a very good description at all. Why even use the term if this is the case?

Eric G #1
“… or that Jesus was truly appealing to self interest in those passages.”
I suspect the majority here will agree with you. Now the definition of self-interest I gave was, “Regard for one’s own interest or advantage …” I’m suggesting that the “… especially with disregard for others” clause is not necessary to self-interest or self-love. So here is my question. What is Jesus appealing to in motivating us to action in passages like the ones I listed above?
I can list more than two dozen such passages from Matthew alone. In some he using language like “Do this and great will be your reward” … and this excludes his parables. Many of his parables include people who make decisions. Some of the people who chose poorly end up in great torment. Think of Lazarus and the Rich Man in Luke. Isn’t a central part of the story that we would rather end up like Lazarus than the rich man? Therefore, it is in our “self-interest” to live appropriately? So if self-interest is not the right word, what is going on here?

Michael, I agree with you that Jesus frequently appealed to “self-interest.” Evangelism itself is often presented as self-interest. Self-interest is to be distinguished from egocentrism.

Fascinating post! Definitions are always important, and slippery, aren’t they?
I mostly agree that “self-interest” per se isn’t wrong and in fact is necessary to any sort of oikonomia. However, I think you’re glossing over some important dissonances between the Enlightenment’s notions of “self interest” and “liberty” (reflected in Adam Smith, as well as in Jefferson and Locke), and the Christian idea of liberty.
You said: “At the writing of the U. S. Constitution, the word “liberty” simply meant not being physically imprisoned.” I don’t think that’s correct. Locke, Jefferson, Smith, et al. thought of “liberty” in terms of the freedom of the will to act according to reason. That is much broader than simply freedom from false imprisonment. The Enlightenment assumption underlying neo-classical economics is that if each individual acts according to reason, then the sum total of those “self-interested” decisions will increase overall social welfare.
But Christian liberty isn’t really about individuals acting according to reason. Rather, in Christian moral theology, “freedom is a human capacity with a purpose: the happiness and flourishing of the human person. So [freedom] is fully exercised not only when actions are taken on as our own, but when those actions contribute to our happiness and flourishing….” (William Mattison, “Introducing Moral Theology,” p. 52) The telos of “self interest” in Christian moral theology has to be understood in the broader context of human flourishing, which in turn has to be understood in the broader context of God’s oikonomia for creation.
In other words, “reasoned self-interest” has to be disciplined by other Virtues, such as temperance and benevolence. It’s true that Locke, Jefferson, Smith et al. would agree with this general statement, but the pernicious thing is that they elided the God of Abraham, Isaac and Jacob as the ultimate source of the Virtues. As a result, neo-classical economics today cares not a whit for the Virtues — they are either exogenous to the “scientific” economic analysis or behavioral externalities that have to be massaged by behavioral economic analysis.
So, “self-interest” — yes — but only if the neo-classical account of “economics” is given a thicker treatment within a Christian virtue ethic of the oikonomia of creation.

Thanks for your ongoing series on economics, Michael. I’m finding it fascinating. In regards to this issue of self-interest though, I’m wondering if this isn’t somewhat a “pie in the sky” notion. In other words, if every one purposively (and non selfishly) looked after their own self interests (as in the example you gave of a parent teaching their kid to look after their hygiene), without tramping on others’ self interests, then perhaps the “invisible hand” in a capitalist economy would word out beautifully for us all. But, in reality, that doesn’t seem to have been the case. As I read American history, I’m shocked by how quickly the ability to seek after one’s own self-interest in a “no holds barred” capitalist economy simply lead to the ability for powerful people to seek after their own selfishness without much regard to the their marginalized societal peers. And, by mid/late 1800′s, in the midst of the industrial age, we had robber barons amassing ridiculous amounts of wealth, often at the direct or indirect expense of poorly treated and paid laborers and “3rd world” imperialized countries that were being abused to both acquire cheap natural resources but also to create markets for the U.S.’s production. Eventually, we saw some regulation, which somewhat limited selfish economical abuses (e.g., limits on monopolies). Then, in more recent history, we’ve seen much deregulation occur (beginning with the Reagan administration and onward), to the point that it seems we’ve witnessed somewhat a rebirth of the robber baron age, and the messes that that’s created.
So, I guess my question is this. Is self-interest (in the Adam Smith sense) a reality that can actually be achieved, or is it simply an ideal that gives way rather quickly to abusive selfishness? And, how can we retain a capitalist economy with purposive self-interest seeking for all, and yet restrain abusive selfishness?

Diane #2
Thanks for the link. Smith wrote in Wealth of Nations:
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
Contrary to popular mythology, Smith did not hold business people in high esteem.
I think your question goes straight to point and raises to important issues. First, is that how we perceive what is in our self-interest has to be transformed so we see the world with Kingdom eyes. Second, this side of the consummation of the new creation selfishness is going to be a part of the human equation.
I’d say that rapacity and a monopolizing spirit are not inherent in capitalism. They are inherent in humanity and most likely to damage with people who have power, whether it be economic, political, religious, or other. Thus, checks and balances on all types of power are essential. Missionally, I think we participate in human systems to help discern balance but we also seek the transforming work of God in people’s lives. Those transformed people become salt and light at work in human systems and relationships.
John #3
The confusion over what economists mean by self-interest is one of the most common. Being clear in our thinking is what I hoping we can achieve.

#7 dopderbeck
Yes! The Enlightenment version is that of good human beings all becoming more rational and ever greater good evolving, absent any notion of Judeo-Christian influence. Self-interest is in no need of transformation except possibly to become more enlightened by reason.
The Christian version does not deny or dismiss self-interest. It says the “self” in self-interest is in need of great transformation that reshapes the self’s perception (of truth) and values. Only then can self-interest contribute to the Kingdom.
As to liberty, I wasn’t entirely clear. What I intended was that in the phrase “life, liberty, and the pursuit of happiness” the framers had in mind something more along the line of not being imprisoned, based on discussions the had at the time of writing. I suspect you know considerably more about the specifics of this than I do. My example may not be the best but I think the morphing of meanings over time is important to remember.

Brad #4
Why did you decide to give 90% to the homeless in this example? What was your motivation?

They were hungry.

I imagine that liberty from imprisonment and liberty to self express were much more closely linked in the “old days” in England, when one could be imprisoned for exercising freedom of speech or religion. Of course, by the 18th century, much of the persecution that marked the seventeenth century had died down, but you still had a state religion and constraints on freedom of speech. I would imagine that the “liberty” the framers of the Dec. of Ind. had in mind conflated liberty from incarceration with liberty of expression as the two liberties would have gone hand in hand to them.

When Jesus declared that it is hard for a rich man to get into the kingdom, the disciples were shocked. In their Jewish culture, rich was evidence of the bountiful blessings of God (based on the blessings/ cursing formula of Deuteronomy 28). “Who then can be saved?” they asked Jesus. As the conversation unfolds, Peter basically asks Jesus, “What’s in this discipleship thing for us? We’ve left all to follow you.” In a glaring appeal to Peter’s and the others’ *self-interest*, Jesus gives a good, encouraging answer.
Michael, I appreciate your point that selfishness is not essential to free market economies. The selfishness is in the human being, not the economic system. And with Ukrainian friends with long memories about the promised “good life” under socialism/communism, we must never forget what the human heart tragically created under that economic system.

Michael and Scot,
Interesting points; I will accept that Jesus appealed to self interest. But the self interest he accepted is much more limited than the self interest assumed by standard economics, and his teaching is inconsistent with the self-interested decisions economics assumes people will make. For example, economics assumes a monopolist will act in his self interest to cut output and raise prices, harming consumers. Or economics assumes a person may buy a good that generates too much waste because they don’t internalize the cost to the environment. I think those decisions are inconsistent with what Jesus would teach we should do. Fortunately (and I think ths is the main point people who aren’t familiar with economics should undersand), economics doesn’t teach that people *should* do those things either; in fact, economics is often used to resolve such problems (i.e., monopolization, or over-consumption of goods that create environmental externalities). The key point is that economics is just a tool; it doesn’t assume that self interest is good; it attempts to create greater efficiencies in light of the assumption that people are self interested (and self interested in a manner that exceeds what Jesus would promote).

Brad #12
“They were hungry.”
That is in observation of a reality not an explanation of a motivation. Other people see the same thing and don’t do this. Why did you respond the way you did?

Brad, why does it matter to you that they were hungry? If you value them, then it is consistent with your own self-interest to use your resources so as to achieve things that you value. The key point of Michael’s post is that “self-interest” does not mean that a person cannot care about others.
How this matters in economics is methodological. Economists use mathematical models to strip down and simplify whatever problems we are examining, to see what the model can tell us about the real world. To do math, you need an objective. Economists have as a general rule adopted optimization (maximizing good stuff or minimizing bad stuff) as the objective in their models. At that point, “self-interest” is a methodological convenience, not an moral imperative.
The key in modeling is to ask what the agent in the model values. If they are selfish and rapacious, we can predict their behavior. If they are other-concerned, we can predict their behavior. But both sets of predictions are built around the assumption that each person has some goals and seeks to achieve their own goals.
Perhaps Brad’s comment is valid that using “self-interest” to describe this methodological assumption is unclear. But alas, it is the term we have inherited, much like a football team scores a touchdown without actually touching the ball down to the ground.
Also, I am happy to acknowledge that there are economists out there – some of them writing introductory textbooks – who seem to make selfishness itself to be good and to treat a selfish understanding of “self-interest” as a moral imperative. However, such beliefs are neither uniformly held among economists nor are they necessary to the endeavor of doing economics.

To EricG #15: “For example, economics assumes a monopolist will act in his self interest to cut output and raise prices, harming consumers. Or economics assumes a person may buy a good that generates too much waste because they don’t internalize the cost to the environment.”
Technically, economics assumes that all firms seek to maximize profits, and that consumers seek to maximize their utility. The outcome of these optimizing decisions is that monopolists will cut output and raise prices, and that consumers will not internalize their external costs if they don’t have to. This is more than a semantic distinction, because we are assuming general behavior (maximize profits, utility) and seeing what happens in particular settings (monopoly, externalities). This allows us to understand at least part of the the reason why prices seem to be higher in single-seller markets and why a free market yields more pollution than is optimal.
If all we did was assume that monopolists do X or consumers do Y, then it would be mathemtaically trivial but theoretically unhelpful to show that monopolists do X or consumers do Y. By rooting the models in more general optimization goals, we are able to identify the root causes of the economic problem in a given situation and (as you mentioned) construct workable remedies for the inefficiencies that arise from various economic problems.

Charles # 18 — agreed on all points; I was attempting to use shorthand to avoid getting too complicated. Although the distinction you draw is indeed more than just semantics, I don’t think it affects the specific points I was making. Or am I missing your point?

Michael,
“Because they were hungry” is as much as a motivation as anything else I could have said. If my reply had instead been “because it makes me feel good” you could have given me the exact same reply:
” ‘Because it makes me feel good’ is an observation of a reality not an explanation of a motivation. Other people may feel the same thing if they feed the homeless, yet they don’t. Why did you respond the way you did?”
At which point I would say that is my motivation … take it or leave it. I suppose I could add the belief that I have that nobody deserves to be hungry, if that is what you are looking for. I suppose you could reply that lots of people think that nobody deserves to be hungry but they don’t give away 90%, but I hope you don’t because we could go on forever with an infinite regress of “why?” questions.
Anyway, back to my original question. Would you agree that my actions of giving 90% of my income to the homeless for food counts as “self-interest?” And let’s say that my motivation is that they are hungry and I believe that nobody deserves to be hungry. Based on what you’ve written, it seems like your answer would be “yes.” If that is the case, doesn’t the term seem inappropriate? Or perhaps your definition is too broad?
Self-interest seems to be nothing more than the fact that people act according to what they prefer. I prefer this over that. If I prefer option 1 but act to achieve option 2 it means in reality I prefer option 2 … I just might not know (or say) that I prefer 2.
I don’t find this description of self-interest “disturbing.” Mostly I find it unhelpful (i.e., too broad to be of any use).

Brad (#12) — I’m guessing that a less flip response would be “it’s the right thing to do.” You could explain why you think it was “right” under a variety of ethical theories. Personally I think Christian accounts of virtue ethics provide the most comprehensive normative basis for ethics. So I would say, “I give some portion of my income to the homeless because I believe being a ‘good’ person entails sharing my surplus with people in need.” Being a “good” person in this account is important because true happiness ultimately consists in the ordering of my affections in a way that is consistent with God’s good ordering of creation. True peace or “shalom” will exist only when God’s purposes and intentions for creation are fully realized.
Therefore, although I’m acting altruistically in giving of my surplus to the homeless, there is also an element of “self-interest” involved, because I desire the “shalom” of God’s Kingdom, which benefits me as well as the homeless person. There’s nothing wrong with this kind of “self-interest”; in fact, it’s present in all meaningful Christian accounts of the “good life” (see, e.g., Augustine’s “Confessions”) and is a constant Biblical theme.
We’re not gnostics or Buddhists. The goal of our spirituality is not the annihilation or absorption of the self into the ethereal realm; it’s the true completion of the self. This is one problem I have with “theologies of glory” in which the value of human existence seems to get subsumed entirely by a God who seems intent only on acquiring glory through demonstrations of power.
Now — what we have to deal with before the eschaton is the pervasive reality of sin. Sin perverts the legitimate self-interest of seeking God’s shalom with the self-interest of seeking my own glory and constructing my own notion of peace. The big question for neo-classical economics with respect to “self-interest” is, does human depravity pervert self-interest to such a degree that free markets cannot produce a justly ordered society this side of the eschaton?

For the record, I have not once said I have any problem with the idea of acting for the benefit of oneself. (I don’t.)

“… does human depravity pervert self-interest to such a degree that free markets cannot produce a justly ordered society this side of the eschaton?”
Yes. The purpose of capital is to create more capital. Any benefit to any person or organization other than the owner of the capital is strictly a by-product. See: Insurance, Health.

“The big question for neo-classical economics with respect to “self-interest” is, does human depravity pervert self-interest to such a degree that free markets cannot produce a justly ordered society this side of the eschaton?” Well put.
I suppose the question that will next arise is what is “a justly ordered society?”
Are “free markets” the equivalent of “capitalism” for this discussion? Or does the concentration of wealth (capital) in the hands of a few interfere with free markets? What about all those old theories we use to learn that “labor creates all wealth?”

Eric #19 – I don’t think the distinction I made alters your conclusions. Rather, I wanted to preempt oher readers from saying, “Well that’s a stupid thing to assume!”
Brad #20 – In microeconomic theory classes at the intermediate and graduate levels, we make clear that the beginning point for choice theory is individual preferences, from which a utility function is derived. In that regard, you are quite correct to say “Self-interest seems to be nothing more than the fact that people act according to what they prefer.” As I mentioned in #17, I think we carry “self-interest” forward as a term because we economists generally know what we mean by it and it’s the term we’ve always used (like “touchdown”). That it is not really descriptive of what we mean is unfortunate but true.

#21 Brad
I think dopderbeck answers the question but I’ll elaborate more.
“And let’s say that my motivation is that they are hungry and I believe that nobody deserves to be hungry. Based on what you’ve written, it seems like your answer would be “yes.” If that is the case, doesn’t the term seem inappropriate? Or perhaps your definition is too broad?”
That is exactly what I’m saying. You believe nobody should be hungry. You want to be consistent with values you hold. Therefore you took the action you did. It accomplishes what you value. It was in your self-interest to do so.
I go back to my point in the post of distinguishing between selfishness and self-interest. Selfishness sees only the self and elevates self above any other concern. Self-interest is having the awareness of self in relation to a larger reality and exercising discernment of what is best for the self to do according to some calculus. For the person who is utterly selfish, the calculus in their self-interest will be their passions and desires. For the person who is transformed by Christ, their calculus becomes realizing the Kingdom of God. Thus, the selfish person who does not give to the hungry is acting in his self-interest. The disciple of Christ who gives to the poor is also acting in his self-interest.
Please remember that part of my aim in these posts is try to open us to how economists think and the concepts they use. As with every discipline, some terms have more precise uses than they do in colloquial usage. Economists are saying that part of every economic model has to be the notion that people reflect on their personal circumstances and act based on some calculus. They call that self-interest. Self-interest may or may not include selfishness.

dopderbeck:
Isn’t it also possible that a person would feed the hungry out of compassion? They see someone suffering, this grieves them and spurs them to do something about it. They may feel good about being compassionate, but this may be a byproduct rather than the underlying motivator. The underlying motivator would be empathy for the person suffering.

Okay. It seems to me that the definition you give for self-interest renders it superfluous. I don’t see the purpose of the term. Every action I take, no matter what, is going to be in my self-interest. Self-interest reduces to what I actually do. Given a choice between multiple options, no matter what choice I take, it will be in my self-interest (otherwise I wouldn’t have taken it).
Your last paragraph brings up another question. What if people don’t reflect on their personal circumstances? Most people don’t reflect on every choice they make. (Example: I never reflect on whether I should wear a seat belt or not. I just put it on without thinking otherwise.) Most actions I take during the day are done without much reflection at all – habits, tradition, etc. all influence my actions as much as my reflective choices. Do economic models take these things into account?

Don’t know if anyone’s mentioned this or not. Sorry if it’s a repeat.
“Each of you should look not only to your own interests, but also to the interests of others” (Phil 2:4).
Note looking after your own interests is ok; just don’t do it to the exclusion to everyone else.

#28 Brad
I’m not sure why it is superfluous. Physics studies behavior of atoms and molecules that are not self-interested. They are unaware of their existence and do not act with volition. Economics studies beings who are aware, reflect on choices, and make them according to some calculus they hold. They are self-interested (they take interest in their selves and act with volition.) There is more going on than pure stimulus and response in physics. That economics acknowledges this and incorporates this into its analysis isn’t superfluous.
I don’t think it is an issue of whether people reflect on each and every decision. We develop habits of behavior (like buckling up) because that is in our interest. That we make it routine to the point we need no longer reflect on it doesn’t change the fact the we developed the behavior out of our interest in protecting our safety. So yes, I would say economic modeling takes this into account.

Diane #24
I started response to your comment but I think I’m going to be addressing some of your points in future posts. So I’m not ignoring. Just postponing.

I think the original post is correct and insightful. Consider the command to not covet. We are not to covet the goods of another, nor the wife of another. It is not the desire for a good meal that is sinful, it is the desire to take food that belongs to someone else. It is not the desire for companionship or sexual fulfillment that equates to lust and leads to adultery, it is the desire for the person who does not “belong” to me, who is committed to another or not yet committed to me.
So it is not self-awareness or even self-interest that is condemned. It is selfishness, self above others that is condemned.
I, for the record, don’t think capitalism is to be equated with Christianity. But I see it as far preferable to collectivist systems for reasons that have root in Christianity. Christianity begins with an assumption that human nature is fallen and men easily fall prey to the worst of behaviors. The old dictum that power corrupts and absolute power corrupts absolutely is to me an expression in practical terms of the doctrine of original sin.
For that reason, I favor limited government and individual responsibility. Concentrating power in the hand of a centralized government is a path to tyranny. Concentrating monetary power in the hands of a monopoly is not much better, which is why we have anti-trust laws. But we should not assume that everyone who gets wealthy pursuing Michael’s definition of self-interest is either greedy or evil or gained their good fortune by oppressing the poor. Many of the wealthier among us are also the most generous. Many of the poorest among us can also be quite selfish and covetous.

Michael (#30),
Someday we’ll be able to reduce it all to physics…
Great stuff.

I do not think that the term self interest is worth the trouble. Most people do not understand what it means and it is two easily confused with selfishness. We should use expressions that better describe our meaning.
To me there are two key issues. First, economic choices are made by people. Many factors are taken into account when people make decisions, ranging from selfishness to generosity. Those who believe in God might be influenced by his requirements. Economists should be clearer about the process by which economic decisions are made.
Second, people generally understand their own needs and wants better than others do (except children and the mentally impaired). Political power is often wielded by people who claim to know better than other people what they should want.

Michael, I do not think that the term “self interest” is worth the trouble. Most people do not understand what it means and it is too easily confused with selfishness. If we want influence, we should use expressions that better describe our meaning.
To me there are two key issues. First, economic choices are made by people. Many factors are taken into account when people make decisions, ranging from selfishness to generosity. Those who believe in God might be influenced by his requirements. Economists need to be clearer about the process by which economic decisions are made.
Second, people generally understand their own needs and wants better than others do (except children and the mentally impaired). Political power is often wielded by people who claim to know what other people should want, better than they know themselves.

Michael and all,
This is a great learning environment! Thanks.

The conversation is stimulating and just to add to the mix, we have St. Augustine saying,”Love and do what you want.” that sounds very liberal but if one loves right one does only the right. As for self=interest, true self-interest helps everyone.