Self Interest and the "War of All against All"

Keith Rankin, January 1998

"The condition of man a condition of war of everyone against everyone."

Thomas Hobbes, Leviathan (1651) pt. I, ch. 4.

"Our whole philosophy of science says that consciousness is nothing but an artefact of material complexity. ... Our whole market system and economics plays into that because it has essentially institutionalized into the culture a Hobbesian philosophy which says that only purpose of life is the pursuit of material pleasure."

David Korten (1997), "Getting it All Out on the Table", New Renaissance 7(3).


Modern economics is thought by some to be fatally flawed by Hobbesian philosophy. For example, the Anti-Economist League (see Brian Easton, "Dogma and Dissent", NZ Listener, 19 January 1998), sees the one-dimensional "economic man" of abstract economics more as a self-centred consumer than a rounded human being.

For Thomas Hobbes, men and women, in their natural state, are unsocialised, selfish, materialist, predatory and parasitic. At risk of being accused of sexism, I will call such persons "Hobbesian man".

For Hobbes, Hobbesian man represented a problem for society. Thus, Hobbes was hardly the advocate for amoral pleasure that David Korten suggests. Hobbes' solution to the Hobbesian problem was the imposition of a coercive social contract between a Leviathan police state and its naturally unsocialised subjects; a rogernomic state that is big on power and small on service. Hobbes' Leviathan is fully consistent with the "monitor" state of neoliberalism (as described by Tim Hazledine in "Trust Accounting", NZ Listener, 29 November 1997).

In today's era of economically advanced welfare states - societies which could not have evolved from unsocialised populations - Hobbes' insights are most applicable to the global economic behaviour of corporates and nations. Sovereignties that "beggar their neighbours" can be called Hobbesian nations, and corporates that behave without reference to some implicit or explicit code of social responsibility can be called Hobbesian firms.

Just over 100 years after the publication of Leviathan, Adam Smith, in his Theory of Moral Sentiments (1759), came up with a quite different story. Smithian men and women are socialised, self-interested, and cooperative. "Smithian man" understands individual self-interest in a compellingly different way to Hobbesian man. Smithian man consciously follows a socially liberal economic morality.

Smith was less Smithian, however, when considering the economic behaviour of nations, as in his later 1776 book, The Wealth of Nations. His solution to the Hobbesian problem posed by the economic predation of the Dutch Republic was to endorse a dual hegemony - a global economy dominated by both the French nation and an Anglo-Celtic empire - that resembles a Hobbesian social contract between ruling and subject nations.

Modern economics seeks to pose Hobbes' question yet still come up with Smith's laissez-faire answer. The economic man of 20th century economics is in fact an uneasy synthesis of Hobbesian man and Smithian man. Likewise, the economic nation, which developed a liberal conscience in the hands of theorists such as John Stuart Mill and Alfred Marshall. It is in fact the current process of globalisation - a capitalist process which subjugates national sovereignty - that we see Hobbesian assumptions come closest to being realised.

Drawing out the implications of the distinction between the philosophies of Smith and Hobbes has become the central project of Deirdre McCloskey, formerly known for her path-breaking work in "new economic history" and in the "rhetoric of economics". McCloskey was in Auckland in July 1996 for a conference on "Metaphor and Narrative Across the Disciplines"; she spoke about the problems of Hobbesian metaphor in economic theory. Like so many of the genuine intellectuals who visit this country (as distinct from the people brought here as cheerleaders for "the reforms", eg as guests of the Business Roundtable), she came and departed unnoticed. The best places to get a feel for McCloskey's work are her regular column in the Eastern Economic Journal, and an interview with Livia Polanyi published in Challenge 40:16-29 (1997).

Any Hobbesian universe is riven by inter-agent rivalry and conflicts over the control of resources. ("Agents" might be individuals, households, firms, or nations.) As well as Hobbes' own phrase ("war of everyone against everyone"), any social scientist will understand something of the concepts of "the prisoners' dilemma", "the tragedy of the commons", the "negative sum game", and "beggar-thy-neighbour"; concepts firmly entrenched into economic lore. All represent descriptions of unsocialised economic behaviour; the inglorious reality of laissez-faire economies dominated by Hobbesian men.

The Business Roundtable has a peculiarly Hobbesian view of the world, in which agents are rational, yet unsocialised. Criminality is seen as normal, in the absence of an efficient police state:

"Academics Peter Hartley and Cathy Buchanan, authors of the Business Roundtable-commissioned report Controlling Crime in New Zealand, argue that falling crime rates across the US are attributable to more police officers and tougher penalties. Crime is a matter of choice and the way to stop criminals is to make that choice more risky. [Police Association President Greg] O'Connor agrees. 'You can talk all the theories you like but, at the end of the day, what will stop criminals from committing crime is the belief that they will be caught. Now, most of them don't believe they will be caught'."

Mark Revington, "Clean Streets", NZ Listener, 24 January 1998, p.32.

Adam Smith's way out of Hobbes' dilemma had been to redefine the problem, in the light of an Enlightenment view of nature. Economic agents - or at least men and women - were not unsocialised; they understood the interdependence of their self-interest with that of their neighbours. Humans were, by nature, intelligent social animals. Self-interest meant behaving in ways that work best when others behave in the same ways, or at least in accordance with the same underlying moral sentiments. Thus socialised individuals do not rip pages out of library books, do not litter public places, do participate in public life, do not drink and drive, do promote and comply with professional codes of practice, do not encourage young people to take up smoking. While by no means altruistic, Smithian man is cooperative.

Because the market mechanism works for the common good when economic agents are socialised, the Smithian marketplace does not require the heavy corrective hand of Leviathan. A morally endowed marketplace is the solution, not the problem.

For Deirdre McCloskey, Smith's theory of moral sentiments forms a true basis for the modern economists' craft. Such a starting point by no means denies the significance of unsocialised behaviour, nor the possibility that at a point in social evolution, unsocialised behaviour might become preponderant. Civilisations have decayed in the past because, when at their height, too many people became too selfish. The theory of moral sentiments creates a theoretical framework that pinpoints selfishness as a significant economic problem, and not as the driving force that some see in economics.

Contemporary economic modelling is frequently flawed because the central actor, economic man, is inconsistently specified. Sometimes he is socialised; sometimes he is not. Thus, many economic models fail in the task they are set up to achieve; to provide a formal analysis of the properties of an ideal (ie Platonic) economic universe.

The real world contains both socialised and unsocialised forms of self-interested behaviour (as well as a few altruist "straw men" of the type that Ayn Rand followers such as Lindsay Perigo see as the only alternative to unsocialised egoists). The task of economic policy is to assess the extent of the damage being done by the unsocialised agents, and to find both (Hobbesian) "ambulance at the bottom of the cliff" solutions to limit the damage and (Smithian) solutions to socialise the unsocialised - ie to induce economic morality in the amoral - thereby removing some of the impediments to the ecologically sustainable growth of living standards.

The most important problems we face today relate to the theoretical and practical difficulties of getting corporations and sovereigns to act as moral agents in the global economy. Brian Easton notes that such bodies do not have the same autonomy as individual men and women to act morally:

"Mammon wants us corporately accountable, not personally responsible. Corporations and states are, of course, impersonal so they cannot be responsible. It is an artefact of law that we give them a legal personality, so they can sue and be sued, defame and be defamed, own property, incur debts, and pay tax. We talk of the New Zealand state as 'The Crown', as though it had a personality and interests independent from the people of New Zealand. And we treat the great corporations, whose chief executives sit on the Business Roundtable, the same way. But they are not people, and they cannot have a spiritual or ethical dimension in their behaviour."

Brian Easton, from "The Commercialisation of Sin and Real Economic Ethics", a presentation in series "Creation of a New Ethic", St. Andrews on the Terrace, Wellington, 24 August 1997.

Like Adam Smith in The Wealth of Nations, such a view implies a need for a Hobbesian solution to the problems posed by globalisation. I tend to disagree, though, in that I do believe corporates can choose to act in morally responsible ways (eg through the emergence of a professional code of corporate ethics, linked in New Zealand to the name of Richard Hubbard, a member of the international group "Business for Social Responsibility".) I also believe that sovereignties are capable of behaving towards each other in a socialised cosmopolitan spirit; a spirit which requires a mutual respect for the global commons, a willingness to enter into a global fiscal contract (which would include stabilising predatory capital flows by taxing them), and generally asserting themselves as the socialised "principals" to whom corporates are collectively accountable.

Nevertheless, as Easton implies, globalisation does represent a real Hobbesian problem in what is, in reality, an essentially Hobbesian international marketplace; a place in which the dominant agents are predatory corporations and mercantilist nations. Increasingly, the sovereign nations are becoming the subjects of an ultraimperialist world order in which a corporate-imposed Leviathan (Easton's "Mammon" perhaps?) is coming to rule over compliant sovereignties 'for their own good'. The MAI Treaty (Multilateral Agreement on Investment) is one obvious element leading towards the creation of Mammon. So perhaps is the World Economic Forum (Internet: under the auspices of which, an email originating from Play Fair Europe! informs me (e-mail: "The 1,000 most important multinationals of the world will meet in Davos, Switzerland, from the 29th of [January] to the 3rd of February, to take major political decisions that will influence everyone's lives".

We may look to both Smith and Hobbes for guidance to resolving the problems posed by contemporary globalisation. Behind the amoral corporations and nation states are intelligent and for the most part socialised individuals. Corporates and sovereignties can be socialised, and quickly, given a will to see cooperation as the basis of a "first best" solution. Such cooperation - which might include, for example, a coordinated full employment strategy - would enable limited-power world governance of the Smithian variety, forestalling the emergence of a global Leviathan.

Nevertheless, in Hobbesian philosophy, a disinterested Leviathan state is rightly regarded as a form of socialisation (albeit a "second-best" form), with even an ordered tyranny being seen as preferable to chaos and anarchy. Indeed, Hobbesian philosophy does not preclude democracy, so long as the ensuing polity provides the coercion necessary to induce the cooperation that is in the general interest if not the generally perceived interest. A democratically accountable police force is indeed preferable to other forms of policing.

Optimal economic outcomes necessarily rest on a foundation of economic morality. A socially liberal disinterested economics must present clear criteria for identifying the forms of competitive behaviours that contravene liberal morality, and the contexts in which morally ambiguous practices might be destabilising. In such an economics "competition" in itself, is neither good nor bad. It is the spirit in which the competition takes place that matters.

Likewise, "protection" and "free trade" are not in themselves good or bad. Certain forms of protection are good in any situation where a general application of such protection leads to fewer harmful outcomes and/or more beneficial outcomes. As an example, the international recovery from the Great Depression was enhanced by protective policies that encouraged each nation to find its own route to full employment rather than encouraging the more predatory strategy of export-led growth.

Some coercive governance of the international realm is required, given that there will always be some participants in the international economy behaving in a predatory rather than in a responsible manner. The achievement of "quasi-voluntary compliance" (ref. Margaret Levi, 1988, Of Rule and Revenue) with liberal international conventions requires some last-resort coercive powers. Some level of world government is required.

The alternative to democratic global federalism is a global plutocracy (Mammon) or some other form of imperialism. Thus we need good multilateral agreements, not no multilateral agreements. We will end up with bad multilateral agreements if the political left turns its backs on multilateralism. Bad multilateral agreements form the basis of a global tyranny whereby Mammon facilitates the enrichment of the unsocialised few who make the rules, and does not serve the "Common Wealth" as Hobbes intended his ruler to do.


© 1998 New Zealand Political Review

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