Tuesday, October 03, 2006

Spontaneous order, self interest and Adam Smith

In my last post I wrote about spontaneous order and the role that nature plays in creating spontaneous order. I'd like to revisit this because I overlooked an interesting insight.
I previously cited a comparison of the Japanese psyche and the American psyche from a study conducted by a sociologist. From my last post:

...the vast sample of Japanese who participated in her research over a period of years appeared to have lost their childhood memories at an earlier age than the Americans in her study. The reason, speculated the sociologist, could be that Japanese adults were brought up less self-absorbed and less introspective.

The sociologist's use of the term “self-absorption” is not only not as crude as it might seem, but it runs parallel to a theory that Adam Smith developed on the subject of human nature and free markets. Of course, Smith used the term “self-interest.” “Self-interest” should be distinguished from “selfishness,” but is perhaps close cousin to “self-absorbed.” Smith said it was a necessary (but not sufficient) condition for a successful free market system.
From The Wealth of Nations:
Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.
After citing the example of the Japanese-American psyche, I asked in my last post how a cause and effect relationship can be defined in this context. Perhaps I can answer my own question now. The cause is self-interest (which is found in nature), and the effects include the predomination and relative success of capitalism in America, and (perhaps) the recollection of childhood! Perhaps memories and capitalism can both be considered the product of “spontaneous order”!

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