In my most recent Defining Ideas article, “Mamdani’s Collectivist Fable,” I pointed out that Zohran Mamdani, in choosing warm collectivism over the frigidity of rugged individualism, had it exactly wrong. I countered that collectivism is what subjects people to highly rugged, and even fatal, conditions and that individualism makes daily life prosperous and safe.
A friend who agrees with me pointed out that many people, probably including Mamdani and many of his followers, have a different concept of individualism. They take it to mean “dog eat dog” and “every man (woman) for himself (herself).” So, it’s worthwhile here to review two meanings of individualism and clarify which meaning I have in mind.
While it is true that the economy runs on self-interest, the dog-eat-dog metaphor is inaccurate. In a free market, we get what we want precisely because people are self-interested. Moreover, there’s a wider view of individualism that includes helping others out of generosity and fellow feeling.
Two sides of Adam Smith
Ask a random person what individualism means and there’s a better than even probability that he or she thinks it means people being selfish and not caring, or at least not caring much, about others. Ask a random academic and the probability is even higher.
That people have this view is understandable. After all, many economists who advocate individualism, including me, often quote this famous passage from Adam Smith’s 1776 book, The Wealth of Nations:
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.
All Smith is doing in this passage is explaining how we get along in life. Even Zohran Mamdani’s followers would be surprised if someone told them that the way to get meat, beer, or bread was to ask the butcher, the brewer, or the baker to give it to them. They understand that they must pay. They also understand that people in all three of those jobs need to make a living. Smith’s point about the butcher, brewer, and baker is part of his overall theme in The Wealth of Nations: it explains how so many people get fed every day, almost entirely by strangers, without anyone relying on generosity or compulsion. It’s important to note that even in this version, with self-interest dominating, it is not dog eat dog.
The mistake many people make is to go from the quote above to the conclusion that Smith and other economists who quote him are saying that we all should be selfish. Indeed, those scholars who know Smith’s work well also know that his 1759 book, The Theory of Moral Sentiments (TMS), delves into how we should behave. Recall that Adam Smith was not just an economist; he was a moral philosopher. When he wrote TMS, his goal wasn’t to understand the economy, as it was in The Wealth of Nations. His goal was to examine how people behave and what constitutes virtue, propriety, and duty. Even some very sophisticated readers of Smith have missed this point. They talk about “the Adam Smith problem” and they mean by it the contradiction between the Smith of TMS and the Smith of TWN. There’s no contradiction. They miss the fact that Smith was discussing two different issues.
Early in TMS, Smith writes, “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.” And he wants to understand that.
One of the most striking passages in TMS is Smith’s discussion of “the man within the breast.” To make it more concrete, each of us is the man (or woman) within his (her) breast and each of us, in Smith’s words, is “the great judge and arbiter of” our own conduct. Again, each of us, or more realistically, most of us, want to be good people. And in being this way, we are individuals. We are not part of some mass collective. Incidentally, Smith’s language here reminds me of one of my favorite passages from a Michael Jackson song: “I’m starting with the man in the mirror; I’m asking him to change his ways.”
Smith’s understanding of humans leads him to this thought: “Man naturally desires, not only to be loved, but to be lovely.”
The wider individualism in practice
One of the great things about individualism is that we get to decide how and in what ways we serve our fellow humans. Some of us might focus almost entirely on building a business. And in a free market, the surest way to build a business is not to cheat customers but to provide something they are willing to pay for and don’t, after the fact, regret having bought. We often hear the famous P.T. Barnum quote that apparently drove his circus business: “There’s a sucker born every minute.” The problem is that he didn’t say that. Indeed, as Charles L. Hooper and I point out in our book, Making Great Decisions in Business and Life, Barnum made a statement that contradicts the “sucker” quote. He stated that “no man can be dishonest without soon being found out and when his lack of principle is discovered, nearly every avenue to success is closed against him forever.”
A simple example of a good exchange is the sale to me, in 2015, of a new Toyota Camry. I still drive it and love it. The executives at Toyota don’t know me and, if they met me, might not even like me, hard as that is to believe. But in producing that car and selling it to me, they cared about me.
Others of us, indeed most of us, probably including many employees of Toyota, also serve our fellow human beings by donating to charity and by doing volunteer work. In “Market Virtues and Community,” which was Chapter Eleven of my 2001 book, The Joy of Freedom: An Economist’s Odyssey, I noted the following:
Even the British magazine The Economist, which so often turns up its nose at the crassness and naivete of Americans, is impressed by Americans’ generosity:
The average American gives a little over one weekly pay cheque a year to charity, the highest rate in the world. Moreover, half the country does volunteer work, averaging more than four hours of it a week.
The fact that we Americans are more generous than people of other countries is not a coincidence. It results from two things. First, we live in a country where the government does less for us than governments in most other countries do and so we don’t wait for government but do it on our own. We were even better at this over a century ago because our governments then did even less. Second, we have among the highest per capita incomes and median household incomes, which are due, in no small part, to our greater freedom. As a result, we can more easily afford to be generous.
That same freedom allows many of us to focus even our careers on helping others. I think of the high-quality lawyers at one of my favorite charities, the Institute for Justice (IJ). IJ takes governments to court when those governments prevent people from using their property peacefully and from entering certain occupations. I would bet that the lawyers at IJ could earn at least 50 percent more by working in more-traditional lawyerly jobs. But they love helping their fellow Americans and are willing to sacrifice substantial income to do so.
Tolerance under individualism and under socialism
In a free society, those who want to set up mini-socialist experiments are free to do so with their own resources. People can have communes, kibbutzes, community housing, and a whole range of communal living with people pooling their previously private property. Is the reverse true in a socialist society? No. In a socialist society, the government owns the means of production. So, people are not able to start their own businesses and trade with others. In communist China under Chairman Mao during the bloody Cultural Revolution, for example, the few remaining private enterprises were almost completely eliminated.
In short, under free markets, voluntary socialism is tolerated; under socialism, free markets are not.
This difference in tolerance extends to other important freedoms such as freedom of speech and freedom of the press. In a free society, people are free to use their resources to finance magazines, blogs, and other tools of expression even if they use those tools to advocate reducing freedom. But in a socialist society, where the government owns everything, freedom of expression is much more difficult, if not impossible. Access to the internet has broken down totalitarian controls somewhat, thank goodness. But expressing oneself without going to prison is much easier in free-market societies than in socialist ones.
Conclusion
In societies where individualism dominates, we get higher incomes and opportunities because we benefit from millions of businesses helping people out of self-interest. As a bonus, tens of millions of generous people donate their resources to others and thousands of institutions have employees whose job is to help others with no remuneration from those they help.
Those who reject individualism are free to do so. But they should understand that the very individualism they reject is what gives them the resources and freedom to reject it.
