In his book Living together, David Schmidtz makes a simple but profound observation about one of the most quoted passages from Adam Smith’s The wealth of nations. Smith says:
It is not from the goodwill of the butcher, the brewer, or the baker that we expect our dinner, but from their respect for their own interests. We focus not on their humanity, but on their self-love, and never talk to them about our own needs, but about their benefits. No one other than a beggar wants to be especially dependent on the goodwill of his fellow citizens.
A hasty reading of this passage might lead some to believe that Smith is claiming that the only motivation we could have for helping each other is the pursuit of personal gain. But Schmidtz helpfully clarifies what Smith is actually saying:
Second, it makes perfect sense that the author, whose first book treated benevolence as primary, then asks himself how to respond benevolently to trading partners. Why, as a well-meaning person hoping to negotiate with brewers and bakers, do you appeal to their self-love? Answer: because you want them to be better off for coming to you. Note that Smith is not saying that bakers are motivated solely by self-love. He says we address ourselves not because of their benevolence, but because of their self-love (WN, Book I, chapter 2). This is a reflection of our psychology, not theirs. He offers insight not into bakers’ self-love, but into what it takes to be benevolent in our dealings with them.
In short, the author of Moral feelings focuses on virtue and benevolence, but, in working out what benevolence means, the author of Wealth of nations explains the obvious: a man of true benevolence wants his partners to be better off with him than without him. The point of appealing to others’ self-love is to give them what they deserve. This is what it’s like to succeed in your attempt to be likable.
When we understand market exchange in this way, we can see how markets help nurture and promote something that is deeply virtuous and humanizing within us. At worst, humanity may try to make ourselves better off at the expense of others. But when we exchange freely with each other and agree on a mutually beneficial exchange, we improve our own situation by also improving the lives of those around us. We make people better off by interacting with us than they otherwise would have been.
A very different perspective was expressed by Harold Daggett, head of the International Longshoremen’s Association, a leading labor union. As it was marked recently by Jim Geraghty, Daggett made the following complaint about the E-ZPass replacing highway toll booths:
Take E-ZPass. The first time they came out with E-ZPass, one lane, and cars were driving through and everyone was sitting in their cars saying, “What’s that all about?” I’ll go get one.’ Today, all those union jobs are gone and it’s all E-ZPass. People don’t realize it, everyone has three cars, everyone has an E-ZPass on the window, and they go through like it’s nothing, and they get a bill in the mail. They didn’t care that the union worker worked in the booth.
Daggett’s motives are a far cry from the benevolence promoted by Adam Smith. Daggett clearly recognizes that E-ZPass was a significant improvement for drivers. It allowed people to get where they wanted to go faster, with less traffic and less wasted time, and made the checkout process much easier and less hassle. And the benefits of E-ZPass extend beyond that. By reducing congestion, they reduced pollution, meaning the benefits went to more people than the drivers who no longer wait to go through the toll booth. Also research revealed that this had particularly striking health benefits for people living close to toll booths. Implementation of E-ZPass led to significant reductions in both preterm birth and low birth weight for families living near the replaced toll plazas.
But for Daggett, none of these benefits seem to matter. He does not appear to be motivated by the desire that drivers or the public in general would be “better off with him than without him.” Instead, he’s outspokenly bitter that drivers and families can’t be kept in a worse position to make union workers better off. The common idea that union leaders are motivated by benevolence and that those who advocate free market exchanges lack sympathy could not be further from the truth. There is nothing benevolent about insisting that other people be worse off for your benefit, and there is great benevolence in wanting to ensure that those you do business with are better off because of you.