The virtue of altruism is held in immeasurably high esteem in our society today. Selfless benevolence at one’s own expense is regarded as the pinnacle of human endeavours, with societies and cultures often reserving their most coveted honours and elevations for people who have apparently undergone acts of selflessness and generosity. Contrary to mainstream thought (and contrary to the thought of some free market proponents), there is nothing in either libertarianism or free market economics that disputes this view. It is true that, strictly speaking libertarians qua libertarians neither promote nor condone any voluntary act; rather, they simply take the position that such acts should not be countered with violent repressions. Whether such acts are good in and of themselves is another matter. Further, free market economists will note that although voluntary exchanges create net wealth (including gift giving in which the donor never “loses” as such but, rather, gains a psychic profit that, to him, must be worth more than what he gave up), there is no part of their science in and of itself that compels them to promote or encourage giving any more than they are required to promote any other type of exchange (although economists may of course note also that increased wealth creation usually goes hand in hand with increased generosity). Nevertheless, as a private individual, it is possible for libertarians and free market economists to regard such specific, overt acts of kindness and generosity – especially those that cause the donor to incur at least the risk of a great material cost, such as wading into a strong river to save a drowning child – as worthy of praise and adulation and that the congratulation of such individuals is far from being out of place.

On the other hand, mainstream thought has extrapolated, erroneously, from these individual, voluntary acts the conclusion that economic progress, the vanquishing of poverty and the path towards a greater and better society are themselves dependent upon altruism and self-sacrifice to the extent that these virtues can cohere into a social system – a system, that is of course, managed by state fiat, such as the welfare state. This belief is dependent upon a further error which is that, in the free market order, the fundamental interests of each member of society are pitted against each other and that one person’s profit must automatically transform into another person’s loss. In other words, the profit and loss system results in benefits to the few (or, at most, some) at the expense of the many. From this incorrect assumption one naturally leads to the conclusions that the only way to benefit more or the many is if these profits (or the wealth that is possessed by the few) are turned over to the many. It is these conclusions with which libertarians and, in particular, free market economists disagree. If that was not bad enough, however, we shall also see that the implementation of systemic methods of wealth distribution is, in fact, completely antithetical to and destructive of altruism and generosity.

This error is similar in nature to another error encountered in mainstream economics – that of supposed shortages of “demand” on an economy-wide sale. In the particular situation of an individual firm or industry, a withdrawal of demand from the firm’s products will result in a slowdown of business for that firm. If the firm is to recover then it is obvious that a recovery of demand for its goods and services is necessary. However, from this entirely correct conclusion regarding a particular circumstance is extrapolated the utterly false conclusion that increases in demand must benefit the economy as a whole. Or, in other words, that where there is a general economic malaise the effective response is to encourage a general increase in demand for an alleged “glut” of supply. As we know from Say’s Law, however, demand and supply are opposite sides of the same coin – the demand for one product is formed by the supply of another. Therefore, one cannot increase general demand without also increasing general supply, i.e. the production of real products. Simply printing more money or lowering borrowing costs does nothing to increase demand; it simply raises the prices of what is already available and shifts the purchasing power over these existing resources from the last or later recipients of the new money to the first or earlier recipients. The real problem in an economic bust is a relative glut of some products, namely, capital goods that are further up the chain of production, and a relative shortage of other products, namely consumer goods and capital goods lower down the chain of production. So too is a similarly false conclusion drawn with regards to altruism and self-sacrifice – that what may be good in one, specific situation is good for society as a whole; and so good, moreover, that the state should systematically force us all towards altruism and self-sacrifice. Let us now explore the reasons why this is false.

First, with particular, individual acts of kindness or generosity it is possible for a bystander to appreciate and form judgments concerning the variables that are weighed in the consideration of whether someone has performed a virtuous deed; the initial helplessness or the “worthiness” of the recipient; the magnitude of relief that the voluntary act of kindness provides; and the magnitude of at least the material cost to the donor. One can therefore form a personal judgment, based on empathy, of the positions of the particular giving and receiving parties as to whether the act of altruism is a good thing. On an economy-wide scale in a society of tens (may be even hundreds) of millions of people, however, it is not possible to form such judgments with any degree of specificity, and much blunter tools such as “income” are needed in order to judge who should be donors and who should be recipients. But such blunt tools tell us nothing about why, for example, someone’s income is low, whose responsibility it is and who should bear the burden of doing something about it. Moreover, there is no reason to suppose that someone who has a “high” income necessarily has cash to spare and does not have other commitments for those funds which the government wishes to redistribute – commitments which, even to others, may be valued as worthy, such as investing in his children’s education.

Second, in the long run massive transfers of wealth from the class of “haves” to the class of “have nots” does not benefit the latter in the long run. One of the most serious misconceptions concerning the ownership of wealth is that one must own it in order to benefit from it and thus only divesting wealth from those that have it and giving it to those that do not have it can ameliorate the plight of the poor and needy. What benefits the latter, however, is not the turning over of wealth to their hands so that it can be consumed and lost forever. Rather, what really hauls the poor up from the depths of despair is the investment of wealth in capital goods which are then able to produce more and more products and services at increasingly lower prices so that the poor can afford to buy them. We can illustrate this by adapting a well-known proverb: give a man a fish and he will feed himself for a day; invest that fish in a business that will produce fishing tackle that the man can afford and he will feed himself for a lifetime. The man in need never owned that original fish nor the capital goods that were produced from consuming it, yet it is clear that his life benefitted from its investment in a productive enterprise to a far greater extent than if he had ever gotten his hands on it directly.

Third, the very motivation towards altruism is most often dependent upon a close family or friendly relationship between donor and recipient where the welfare of the latter is of great importance to the former. Such a motivation is destroyed when your money disappears into a bureaucrat-run black hole. The result is that, as people lose their ability to spend their money in ways that they want, the motivation to producing wealth in the first place is destroyed. There is therefore less wealth to distribute anyway. Critics may, of course, argue that such a result is owing to the alleged “selfish” and self-centred nature of humans and that surely we – i.e. the state – has a duty to attempt to overcome this? There are at least two responses to this. First, it is part of the natural condition of humans that the primary ends and values that they hold are concerned with their immediate environment – that is, the welfare of themselves, their friends and their family; in other words, people whom they know, care about and have the ability to form empathetic judgments about. It is the stimuli from these sources that most potently determine our desires and choices. Everything else that goes on in the world is, for the most part, out of sight and out of mind, or at least very remote and can be brought to us only electronically through the media. But one does not even need to go that far, as most people are unlikely to even be able to appreciate the conditions, needs and desires of people in another neighbourhood in the same town – or even in the same street. People do, of course, devote themselves to causes that aim to help people far away about whom they may know very little; but these are specific causes towards which one may have a specific motivation. Wealth redistribution, however, aims at ameliorating hundreds, if not thousands of afflictions across many millions of faceless people. It is simply not possible for any human to form empathetic appreciations of all of those individual circumstances and, thus, neither will they be able to appreciate any kind of amelioration of these afflictions if they happen hundreds of miles away (this is before we get into any discussion of whether wealth distribution does, in fact, accomplish such ameliorations). Therefore, it is not possible for the typical human to motivate himself towards striding towards providing for a giant pot that aims to solve these problems, or at least not to the same degree he motivates himself towards providing for ends of his choosing. Moreover, we may ask whether a person with the ruddiest bleeding heart would, if it came to a choice, prefer to work towards contributing to the tax pot ahead of, say, caring for his sick and dying mother. Second, the very fact that wealth redistribution is forced (by the threat of imprisonment) rather than undertaken voluntarily does nothing to promote altruism in any way at all. Indeed, we might say that genuine altruism and selfless behaviour worthy of praise and recognition relies upon the fact that someone could have chosen, freely, to have done something “worthy” with his time and money. When I am forced to hand over my money, however, I have in no way “behaved” altruistically; in fact I haven’t really “behaved” at all – rather the money was simply taken from me. Further, rather encouraging any feelings of generosity the forced appropriation of my property it is likely to make me bitter and resentful and, moreover, to curb any desire to be generous with the remainder of the funds that I have left. To make matters worse, the welfare state does not leave the recipients of welfare spending as kindly and grateful beneficiaries who feel they were lucky to have avoided misfortune. Rather, the welfare state begets a sense of “entitlement” and dissolution of personal responsibility – that it is the state’s responsibility to provide for their needs and that they have a right to the state’s assistance. Ironically, therefore, the welfare state itself increases antagonism and selfishness rather than promoting their antitheses.

The attitude of selfless altruism can also be seen also in the elevation of those who devote themselves to so-called “public service” above those who compete in the allegedly greedy and grubby business of the private marketplace. Although positive views of politicians have soured considerably in the past generation, it is still widely believed that private industry is where people go to make lots of money to keep for themselves, while those who seek public office shun such squalid and base motivations and, with their visions of a “greater” society, can almost single-handedly make everyone better off without a thought of any benefit to themselves. Indeed, to the present author, it beggars belief that people are gullibly hypnotised by the illusion that all of their hopes and dreams are dependent upon a tiny minority, or even (when you witness the almost messianic reverence devoted to presidential candidates) a single person out of a society of millions gaining a job ahead of somebody else. It is in no doubt true, of course, that many people seek to enter politics with the desire, albeit the naïve one, to help people and to improve society. It may also be true that they could have amassed greater private fortunes by seeking employment in the private sector. Nevertheless, all political accomplishments (other than the few and far between measures that seek to roll back the interference of the state) necessarily produce a negative sum result – negative because what is given by government to one set of people must be taken by government from another, minus a cut to pay the salaries of the politicians and bureaucrats. This is before we consider the destruction of the incentives to create wealth that we outlined above. Even if, therefore, we stretched credulity and viewed politicians as truly angelic and selfless they would still not accomplish anything that would produce a net gain to society.

It is not the aim of our discussion here to suggest that a society distinguished by capitalism and free enterprise would suddenly create some kind of utopia where rank selfishness is without any negative consequences. Rather, it is simply to point out that, in the long run, the vanquishing of poverty is achieved by the investment of more capital goods in order to make more products affordable to people with the existing money that they earn themselves; not through giving them more money that is earned by and forcibly confiscated from somebody else. In such a society the high incidence of people needing the help of others would be prevented, not just cured. Nevertheless we might also note that it is a society that is highly prosperous and without a systematic welfare state that encourages rather than obliterates charitable endeavours. Overwhelmingly this is because people simply have more to give – it is no great mystery as to why most of the world’s great charitable foundations and societies originated in the nineteenth century, the era of the relatively most capitalistic progress and the least intervention by a formal welfare state. Ironically, it is the welfare state that has squeezed out private charity and genuine altruism from having any mainstream role in society. Additionally, however, in the absence of a compulsory so-called “social safety net” people rely on maintaining good relationships based on trust, reliability and selflessness with family and friends precisely so that they may be there for each other to cushion the consequences of the occasional unforeseen circumstance. Far from provoking any atomistic and individualistic existence freedom promotes and encourages a strong community and family spirit. If the virtue of altruism is to be nurtured then there cannot be a better place for it than there.

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