Two-way bargaining, each addressing the self interests of others

Ill-Informed Attribution to Adam Smith Of Views on Selfishness
from Adam Smith's Lost Legacy by Gavin Kennedy

Selfishness and Adam Smith do not go together. If Richard had read Adam Smith in ‘Moral Sentiments’ and ‘Wealth Of Nations’ instead of a few quotations from unreliable sources (Christmas Crackers?) he would know that selfishness is treated critically by Adam Smith. The notion that selfishness was good came from a earlier commentator, Bernard Mandeville (1670-1733), whose book, ‘The Fable of Bees’, which made him famous, began as poem and was fleshed out to a best seller in various editions, 1714, 1724 and 1731 (it was recently reproduced in an economically priced two-volume edition by Liberty Fund).

Smith’s robust critique of the ‘private vice, public good’ argument is in Moral Sentiments (Book VII). The notion was popularized by a Hollywood script writer in ‘Wall Street’. Smith did not assume that selfishness was ‘self-limiting’ or had ‘decent limits’. He disregarded its utility altogether.

In fact he asserted the opposite. People act in their self interest and the 18th century idea that was not the same as selfishness. Take the famous quotation (Wealth Of Nations I.ii. pp26-7) about seeking our dinner from the ‘butcher, the brewer, and the baker’, which is commonly misinterpreted by people who confuse Bernard Mandeville with Adam Smith (from not having read either or both authors). Smith’s advice was not to expect our dinner from their ‘benevolence’ (we cannot ALL live on the benevolence of others – who would everybody rely on for their dinner?) – nor by having regard to ‘our necessities’ (surely a selfish notion to think only of ourselves), but to address their ‘self love’ and their ‘advantages’, not our own self love and our advantages, which is an unselfish approach on our part.

In bargaining for our dinner, or whatever, from others the nature of our behaviour is to ‘propose to them: ‘Give me that which I want, and you shall have this which you want’. In short, the practice two-way bargaining, each addressing the self interests of others, and by considering the interests of other people, we address our own too!