F. Y. Edgeworth, a classical economist, claimed that “the first principle of Economics is that every agent is actuated only by self-interest.” Economics is focused on analyzing people's behaviors. The primary way economists analyze this behavior is by looking at people’s choices, and from them, they determine the values people place on goods. Since economics only sees choices in terms of self-interest, these values can only come from how people believe these goods will bring them benefit. Economics has a significant effect on both our political and cultural lives, and so does this economic assumption of the egoism of humanity. However, believing that everyone is egoistic is a questionable supposition, and because of how thoroughly economics permeates the world, there may be significant consequences from this misunderstanding.
Even at the times when we are most disappointed in humanity, we cannot deny that there are people still out there who help others. If we choose to say, as economic theory does, that all these actions are purely out of selfishness, we belittle the good things such people have done. There are many who help for the sake of others, not for the sake of some positive emotional response in themselves that might result from their altruism.
That said, even the altruism in our world is chafed by economic egoism. Everyday, we see advertisements training us to look for how a product can benefit us. Our vision of success is nothing more than an amassing of wealth. The longer we are in a system that thinks we are egoistic, the more likely we are to become egoistic. As Lao Tzu says,"the ever-wanting soul sees only what it wants." It is from this forced egoism that the troubles originate.
Egoism is inherently antisocial in nature. Certainly there are selfish reasons to interact positively with others, but for a given relationship, it is inevitable that there will eventually come a time when it is within one’s self-interest to execute an action that is not in the interest of the continuation of that relationship. In the context of purely economic relationships, eventually an opportunity will come about such that it is more profitable to betray one’s relational counterpart than to assist. The focus is on the self.
In contrast, economic functions are inherently social in nature. In order to obtain goods, we must interact with people. In order to produce and sell goods, we must interact with people. As per Lionel Robbins' definition of economics, the field is concerned with “human behavior as a relationship between ends and scarce means.” What makes these means scarce is the existence of others. Economics concerns the other; therefore, its applied functions also concern the other. Economics necessitates a degree of focus on the other. Thus, while economics and egoism clearly can coexist, their natures are at odds. A social system based on an antisocial principle is an unhealthy system.
Sadly, as there is yet a partial degree of egoism in human nature that must be acknowledged, we cannot disregard egoism from economics. In fact, despite the drawbacks, assumed egoism might be the only way to have a stable economy. A good economy is a wealthy economy, so a prioritization of wealth is necessary to bring about this good economy. Perhaps the best course of action is this frustrating one: continue to use conventional economic theory and endure its defects, but recognize it as a necessary evil, and attempt to fight its detrimental influences.
