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Is the Market the Arbiter of All Things?

Is the Market the Arbiter of All Things?

Op-Ed Essay by Mike Shesterkin, Exec. Dir. SMSBF

As students of business, we’re taught the “profit motive” leads to breakthroughs that make life better, and without it, nothing would get done; if it were not for the profit motive, human civilization would not have advanced, and we’d still be living in caves, clubbing each other with the bones of dead elephants. Throughout all of human history – so we’re told – it is the profit motive that has led to where civilization finds itself today. If we weren’t so smart, we may even believe the profit motive has mystic power.

But is this true? Should the profit motive, and the idea – which comes from a co-opted reading of Adam Smith’s work – that the wisdom of a disembodied “invisible hand” (of the market) be used as some sort of Delphi by which all decisions affecting a society or community are made?

In 1980, Ronald Reagan ushered in a new era in US politics. Reagan’s campaign to “get government” off the backs of the American people – the Reagan Revolution, as it is now called – was predicated on neo-liberal economics, or the notion that “the invisible hand” of the market is the best arbiter of what’s best for the common good. Individuals, as agents of “enlightened self-interest”, motivated by profit and free of government intrusion, would somehow mystically bring-about delivery of improved social services, protection of the environment and an improved commonwealth. Trickle-down economics would be a better way to lift-up poor folks, and ensure the protection of the environment, than the burdensome nature of federally controlled programs of wealth redistribution.

The fundamental flaw with these notions is that human behavior is far more complex than what can be explained by the profit motive. Unless one is a sociopath, a person who sees nothing more important than his or her ego, then the profit motive doesn’t come close to explaining human behavior. Few of us are so linear in our behavior; in fact, we are motivated by an array of factors that form the complexity of human consciousness.  Yet, the neoliberals – folks such as Milton Friedman and all the rest who lapped at the feet of Ayn Rand – would have us believe it is simply individual self-interest that drives and moves all things in nature. Forget that the whole of the biota, and even the entire cosmos itself, is actually self-organizing and cooperative.

In his 1776 publication of Wealth of Nations, Smith wrote the famous quote, “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 self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages”. While this may have seemed true to someone living in the 18th century, one who was deeply affected by the English civil wars and still struggling to make sense of the Reformation, it falls far short of what we observe today, and what science is teaching us about human nature and the nature of the cosmos itself. To Smith’s credit, nonetheless, he recognized that human beings struggle with an inner “duality”, a struggle that pits animal like self-interest against a sense of morality and what is good for all. Unfortunately for us, the neoliberals and their Nietzschean worldview, co-opted Smith’s work and have managed to foist upon us a recapitulation of something that didn’t work 200 years ago, and is not working today: Enlightened self-interest never did advance the commonwealth and it never will.

We need to look to what science is teaching about the world around us and leverage this knowledge to organize our work – to build the rules through which business is practiced. The market place is a thing invented and controlled by human beings, and in this age of consumerism, it is predicated upon exploiting the animal side of our nature; to think it ought to be used to decide what’s good for all is simply asinine. It is what science is teaching us about nature; the emergence of the “phenomenon of human beings” and our place in the cosmos that ought to be used to guide our understanding of what’s best for the commonwealth, and at a practical level, how we organize business, which is simply the way in which we organize work.

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