Please use this forum to discuss models of capitalism. Non-exhaustive list of questions that fit in this forum:
Please be respectful to one another and discuss and criticize ideas, not persons.
To stimulate discussion, here is a repost:
I have struggled with the following question a lot, "What is the role of morality in a free market economy?" Our economic theory glorifies greed. We are taught by Adam Smith that when everyone is pursuing self-interest, the society benefits as a whole.
So how do we reconcile that with morality which says that we should have advance society's interest, have compassion for fellow human beings, and that we should care for the weak among us.
So which one is true? What is good for our economy and society? Everyone pursuing self interest or everyone pursuing self interest as long as it benefits society? I struggled with this until I found the answer in John Nash, the famous math genius who studied game theory.
John Nash proved, mathematically, that Adam Smith's theory is incomplete. He proved that everyone pursuing self-interest only leads to disaster for all. Instead, the best outcome occurs when everyone cares for self-interest and the well being of the group. He essentially validates the role of morality in economics.
The following clip from The Beautiful Mind illustrates his point using the beautiful blonde example.
John Nash: https://en.wikipedia.org/wiki/John_Forbes_Nash,_Jr.
Thanks. I am looking forward to watching this particular thread grow.
Just a comment. Not really answering any of the questions. Humans are corruptible by nature, so you cant have one person dictating what is best for a group, even if its some great figure. Even if it came to a democratic vote, its just not probable that the whole group is going to agree on the best outcome. I mean, if Nash told me not to go for the hottest female because of a theorized outcome there'd be an argument. Go play with news paper clippings Nash! Human nature always trumps brainy theory. Unless God or some superior Alien race comes down from the sky to direct us, I think we need to live for our own self interests, its just natural. The philosophy of Objectivism/Lassize Faire Capitalism sum up the advantages of pursuing ones own self interests. The basic foundation is individual Liberty. Ayn Rand has a great philosophy and the Four Fathers wrote two amazing documents on how to govern a nation. If effort was made to adhere to either I think we'd be in a better place.
I must feel you out here, since you are first time poster. Do you feel self interest and selfishness are mutually exclusive?
It totally depends on the individual. Some people dont care about other people period. So, helping others is not in their own self interest at least in their own mind. Me, I like to help people and I find that the better I treat people the better they treat me. Are those actions selfish? Technically, yes, but its win-win. I help people for my own self-interest. Now, is it in their best interest that they receive certain kinds of help (i. e. welfare/entitlements)? In most cases no. Not giving a drug addict money could be deemed as an individual making decisions in his own self interest for the benefit of a group/society.
grym1, what you just wrote is the essence of John Nash's argument, in that the best outcome to everyone is when they pursue economic transactions and deals that are "win-win". Win-win is not only moral and ethical, but is also the most optimum economically.
Contrast that with our current model of capitalism which is win-lose. Compensation regardless of performance: corporate execs win, shareholders lose. Unnecessary wars: military industrial complex win, sovereign countries abroad and domestic taxpayers lose. Easy money policy: private banking cartel win, taxpayers lose. Regulation strangle: big corporations win, small businesses lose. ZIRP and QEs: speculators win, savers lose. Job outsourcing: corporate execs win, middle class lose. In all these examples, a few hands win big, the great majority lose.
Do you now see the difference between win-lose (Adam Smith's invisible hand) vs. win-win (John Nash's model)?