The study of economics lends numerous insights into human nature. No wonder the subject was considered a part of philosophy for a very long time — until Adam Smith came along and detached it from its mother. And so he is known as the Father of Modern Economics. (‘Midwife’ of economics, perhaps!)
Smith’s Wealth of Nations is probably the most famous economic treatises of all time. In particular, ‘self-interest as the guiding principle behind human actions’ defined Smith’s theory and is the primary economic principle even today. Economies function on the premise that everyone looks out for their best interest, and tries to strike the bargain that brings them the best profits. Self-interest functions in private lives as well. Since it’s so closely linked to self-preservation, it could be considered a sort of biological instinct, in tandem with ‘survival of the fittest.’ For Adam Smith, the idea of a free market enterprise fuelled by self-interest and competition was the key to prosperity.
But then this concept drew a lot of flak for positioning humans as egoistic creatures that couldn’t think beyond their own needs. Then there was the question of how such an attitude could lead to prosperity for all, when obviously everyone didn’t have the same opportunity nor bargaining power. And where, in this scenario, do we fit those compassionate souls that use all their energies in the genuine service of others? The answers, in fact, are given in the first book that Smith wrote — The Theory of Moral Sentiments. This earlier work explains the existence of a ‘sixth sense’ in a person “which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.” Smith at the time termed this force as ‘sympathy’.
In our time, we know it better as empathy: to put oneself in another person’s shoes and walk a mile in them. To see the world from their perspective—their problems and their hopes, their convictions and complications. Empathy, in fact, is triggered in our minds by mirror neurons which fire as if the experience is happening to us directly. It is extremely important as an economic concept, too, because it deals with the services provided by caregivers at home — for the elderly or for children — services provided out of love and concern and free of cost. The irony is that such services cannot be measured monetarily, and where people opt out of the workforce to provide such care, their contribution to the GDP ceases—literally creating a drain on the economy.
But outside the world of money and growth rates, there is a world of law and order, of communities and relationships and entire social systems. Pure self interest would wreck havoc on that world, since it thrives on co-operation more than competition. If people would just be able to exercise empathy at all times, no one would cheat or hurt another, no one would try to grab what was not fairly theirs or belonged justly to another person, or deny another her/his rightful due. All because you’d be able to see yourself in the other’s place.
True, the world needs competition for progress, because civilisations move ahead through the force of the human desire to succeed. But the sweetest and purest success is the one achieved by pushing determinedly forward, in becoming the best version of yourself, rather than pull someone else and bringing them down to a lower level. By pushing yourself toward what you desire, instead of cheating another out of it. That would be a truly free and fair transaction, the right balance of both Smith’s theories.