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. 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. —Adam Smith, Wealth of Nations
A lot of A Beautiful Mind doesn’t deal with economics…but there is that one beautiful scene…
Nash: Adam Smith needs revision.
Hansen: What are you talking about?
Nash: If we all go for the blonde…we block each other. Not a single one of us is gonna get her. So then we go for her friends, but they will all give us the cold shoulder because nobody likes to be second choice. Well, what if no one goes for the blonde? We don’t get in each other’s way, and we don’t insult the other girls. That’s the only way we win. Adam Smith said the best result comes from everyone in the group doing what’s best for himself, right? That’s what he said, right?
Nash: Incomplete. Incomplete, okay? Because the best result will come…from everyone in the group doing what’s best for himself…and the group.
Hansen: Nash, if this is some way for you to get the blonde on your own, you can go to hell
Nash: Governing dynamics gentlemen. Governing dynamics. Adam Smith…was wrong.”
Now I will forgive them a little that they’re wrong about ““In competition, individual ambition serves the common good.” I can’t find that anywhere in Adam Smith so it’s clearly made up by the writers, but it is the general impression of the quote that started this blog. Even if in all actuality, Adam Smith both implicitly and explicitly said that we are at our best when we act out of self-interest AND concern for others in both Wealth of Nations and The Theory of Moral Sentiments. But let’s ignore this small part (Hollywood is full of idiots, and besides it makes for more impressive drama if he figures out something new rather than just proving it mathematically).
The central argument is two-fold. The first is that competition leads to better results. When guided by rational self-interest people create things that benefit not only themselves but everyone else. It’s just that when we act out of self-interest AND concern for others, when we look for win-win solutions as opposed to just win-lose ones we all do better.
Now as I said, you could already find this in Wealth of Nations but it’s nice that this movie showed that not only is it a philosophical and economical fact but also a mathematical one.
Now compare this to most politicians today who suggest that self-interest is wrong or needs to be tempered. Or that only when subjugating our self-interest to the interest of the whole works. Or worst of all that some have to suffer for progress to be made so let’s pick the rich, or this or that group to suffer. They’re not only looking at a win-lose scenario it’s one where the person who produces wealth is the loser. And if that didn’t kill innovation, keep in mind that in reality their plans always turn out to be a lose-lose.
The basic facts of reality is that self-interest is needed to progress in society. It is even better if we look for the win for ourselves as well as others…but we must always be looking for the win for ourselves.
Oh…and here is the full quote from Adam Smith…it’s a little more thoughtful than just the sentence taken out of context:
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. 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. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens. Even a beggar does not depend upon it entirely. The charity of well-disposed people, indeed, supplies him with the whole fund of his subsistence. But though this principle ultimately provides him with all the necessaries of life which he has occasion for, it neither does nor can provide him with them as he has occasion for them. The greater part of his occasional wants are supplied in the same manner as those of other people, by treaty, by barter, and by purchase. With the money which one man gives him he purchases food. The old clothes which another bestows upon him he exchanges for other clothes which suit him better, or for lodging, or for food, or for money, with which he can buy either food, clothes, or lodging, as he has occasion.