… as well as sacrificing a bit to help earthquake and flood victims, and, well, how about not sacrificing so many American lives by dropping the atom bomb in WWII, while sacrificing Japanese lives, C-sections in the case of Caesar (as in Caesarean Section), and, sacrificing a bit of a fine birthday party for one’s own-child to help a poor child somewhere in another corner of the Spaceship, or sacrificing expensive shoes to save a drowning child? This Blog post was stirred by a Russ Roberts EconTalk Podcast "Michael Munger on How Adam Smith Solved the Trolley Problem" on September 11, 2023. The short essay by Munger that Roberts refers to is at AIER .
All manner of economic & community choices on the real Spaceship Earth involve some sacrifice of self-interest. So, the mystery is, why? The paradox of maximizing self-interest, as in Max U, while sacrificing self-interest, well, that is a paradox because people do sacrifice self interest? Why do people sacrifice self-interest, in such things as aid to earthquake and flood victims? How solve the puzzle? Well, as the Podcast points out, Adam Smith solved it back in the 1700s, and, well, too few apparently understood the theory and frame Smith offered.
As Adam Smith would point out, mainstream (Micro)economics using Single Interest Theory (SIT), the Max U theory of self-interest only, cannot explain the puzzles and paradoxes represented in such things as not acting to Max U without sacrifice in the case of the trolley problem (kill 1 or kill 5); sacrificing a little finger after pondering what could be done to help the other (an Adam Smith example, pointed to in the EconTalk Podcast); or sacrificing a bit in self-interest to help out victims of a national calamity in some far off land (another Adam Smith example; or, dropping the atom bomb on Japan (another example in the EconTalk Podcast); or, even putting on a less expensive birthday party at home and donating the difference to poor children (EconTalk Podcast pointing to the Effective Altruism frame of Peter Singer) and destroying one’s expensive shoes to save a drowning child, or saving the pregnant woman rather than the fetus when the woman could die? Why? It cannot be rational, right (or, is that left)?
The mystery of the tendency to want to Be Loved & Be Lovely, jointly, at the same time, another Adam Smith claim, well, why? And, all said mysteries, puzzles and paradoxes are easily resolved using Dual Interest Theory (DIT) in Metaeconomics, so, hang on, here we go. And, Adam Smith was a MetaEcon, too.
Adam Smith on Conscience
The story --- parts of the following read aloud during the EconTalk podcast --- unwinds in Adam Smith, 1759/1790, The Theory of Moral Sentiments, in CHAPTER III. Of the Influences and Authority of Conscience:
“Let us suppose that the great empire of China, with all its myriads of inhabitants, was suddenly swallowed up by an earthquake, and let us consider how a man of humanity in Europe, who had no sort of connexion with that part of the world, would be affected upon receiving intelligence of this dreadful calamity. He would, I imagine, first of all, express very strongly his sorrow for the misfortune of that unhappy people, he would make many melancholy reflections upon the precariousness of human life, and the vanity of all the labours of man, which could thus be annihilated in a moment. He would too, perhaps, if he was a man of speculation, enter into many reasonings concerning the effects which this disaster might produce upon the commerce of Europe, and the trade and business of the world in general. And when all this fine philosophy was over, when all these humane sentiments had been once fairly expressed, he would pursue his business or his pleasure, take his repose or his diversion, with the same ease and tranquillity, as if no such accident had happened. The most frivolous disaster which could befall himself would occasion a more real disturbance. If he was to lose his little finger tomorrow, he would not sleep to-night; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own. To prevent, therefore, this paltry misfortune to himself, would a man of humanity be willing to sacrifice the lives of a hundred millions of his brethren, provided he had never seen them (Smith 1759-1790, loc 2614-2625)?”
Horror at Thought of Self-interest Only
Notice how Smith sets up the case of hardly knowing the people who had the misfortune, but still speaking of same as brethren, as in empathy-with other people on the Spaceship. So, something is at play other than self-interest to bring sacrifice for the greater interests. Smith continues:
“Human nature startles with horror at the thought, and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it. But what makes this difference? When our passive feelings are almost always so sordid and so selfish, how comes it that our active principles should often be so generous and so noble? When we are always so much more deeply affected by whatever concerns ourselves, than by whatever concerns other men; what is it which prompts the generous, upon all occasions, and the mean upon many, to sacrifice their own interests to the greater interests of others (Smith 1759/1790, loc 2637)?”
Horror of Self-interest Must be Tempered by the Conscience
Smith is clarifying that self-interest is not always the only force involved in economic (and community) choice. In fact, it is a "horror ... of thought" if that is all there is: Single Interest Theory (SIT, self-interest only) in Microeconomics, well, yes, a horror of thought. And, if it does not horrify, please at least consider the possibility something is missing, and perhaps it is just simply wrong, a claim with which Adam Smith would agree. Yet, Smith continues, it is not compassion on the way to benevolence, or any other of the soft powers that make it right:
“It is not the soft power of humanity, it is not that feeble spark of benevolence which Nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love (Note: Smith sees the need to counteract, to temper the primal self-love, temper the self-interest). It is a stronger power, a more forcible motive, which exerts itself upon such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct (Smith 1759/1790, loc 2637).”
Conscience (and self-command, self-control to act on it, to exert it) plays a key role in striking a balance. And,
"It is he who, whenever we are about to act so as to affect the happiness of others, calls to us, with a voice capable of astonishing the most presumptuous of our passions, that we are but one of the multitude, in no respect better than any other in it (Note: Arrived at by being in empathy-with the other, seeing a shared other-interest with that other, represented in the moral sentiments) and that when we prefer ourselves so shamefully and so blindly to others, we become the proper objects of resentment, abhorrence, and execration (Note: So, a person can't Be Lovely maximizing self-interest; it must be tempered, bounded). It is from him only that we learn the real littleness of ourselves, and of whatever relates to ourselves, and the natural misrepresentations of self-love can be corrected only by the eye of this impartial spectator (Smith 1759/1789, loc 2637).”
A viable Economy & Community is one composed of people tempering their own self-love with the efforts of the impartial spectator, that within the Human which starts by empathy-with, perhaps moving to being in sympathy-with the shared cause, the shared other-interest.
Also, and highlighted at the end of the Munger piece at Adam Smith Discovered (and Solved!) the Trolley Problem | AIER :
“It is not the love of our neighbour, it is not the love of mankind, which upon many occasions prompts us to the practice of those divine virtues. It is a stronger love, a more powerful affection, which generally takes place upon such occasions; the love of what is honourable and noble, of the grandeur, and dignity, and superiority of our own characters (Smith 1759/1790, loc 2649).”
So, it is not other-regarding, not love expressed in other-regarding of the neighbor. It is about our own-interest, tempering the stronger love for our own-selves, essential to the dignity, superiority of our own characters. It is about internalizing the shared interest, the other(shared with others, while internalized)-interest that works for the other, mutually agreed to as the right thing to do. And, well, empathy-based, shared love with the other, is one of the Other Virtues that must temper the Prudence-only (self-interest) virtue.
Self-interest Must be Tempered Within Both the Market & Community
As the more famous quote by Smith also points out, it is also not the soft power of humanity, such as compassion, not the feeble spark of benevolence that makes for a viable Market: It is not 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 (Smith, 1776/1789, loc 239-251).” So, benevolence (i.e., compassion-with) is simply not a driver on any front, in Market or Community, but Smith goes on to clarify that it is also not about self-interest only, as each person had to “…humble the arrogance of ... self-love, and bring it down to something which (the) other ... can go along with (Smith, 1759/1790, loc 1714-1727)."
And, we know that the humbling is done by the eye of the impartial spectator, representing the conscience on the way to the shared moral sentiments, the shared ethic. Adam Smith focused on own-interest, not self-interest and saw the key role of the moral sentiments in tempering that self-interest. Said moral sentiments came out of being in empathy-with that which the other could go along with, and joining in shared other-interest with it. The moral sentiments, the ethics, played a key role in offsetting the horror of self-interest only.
An Aside: People Even Empathize-with, Join in Sympathy-with, the Dead
From another part of Smith (1759/1790), not mentioned in the EconTalk Podcast:
“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others… The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it. As we have no immediate experience of what other men feel, we can form no idea of the manner in which they are affected, but by conceiving what we ourselves should feel in the like situation. (Note: Empathy-with). Though our brother is upon the rack, as long as we ourselves are at our ease, our senses will never inform us of what he suffers. …. By the imagination we place ourselves in his situation, we conceive ourselves enduring all the same torments, we enter as it were into his body, and become in some measure the same person with him, and thence form some idea of his sensations, and even feel something which, though weaker in degree, is not altogether unlike them. His agonies, when they are thus brought home to ourselves, when we have thus adopted and made them our own, begin at last to affect us, and we then tremble and shudder at the thought of what he feels…. That this is the source of our fellow-feeling for the misery of others, that it is by changing places in fancy with the sufferer, that we come either to conceive or to be affected by what he feels (loc 350). … which create pain or sorrow, that call forth our fellow-feeling. Whatever is the passion which arises from any object in the person principally concerned, an analogous emotion springs up, at the thought of his situation, in the breast of every attentive (person) (loc 362).”
Empathy-with arising from mindful attention is the starting point on the way to fellow-feeling, to being in sympathy-with, the shared moral sentiment thus formed.
Adam Smith even points to empathy-with on the way to sympathy-with even the dead:
“We sympathize even with the dead, and overlooking what is of real importance in their situation, that awful futurity which awaits them, we are chiefly affected by those circumstances which strike our senses, but can have no influence upon their happiness. It is miserable, we think, to be deprived of the light of the sun; to be shut out from life and conversation; to be laid in the cold grave, a prey to corruption and the reptiles of the earth; to be no more thought of in this world, but to be obliterated, in a little time, from the affections, and almost from the memory, of their dearest friends and relations. Surely, we imagine, we can never feel too much for those who have suffered so dreadful a calamity. The tribute of our fellow-feeling seems doubly due to them… (Smith 1759, loc 414).”
So, fellow-feeling, empathy-with, and sympathy-with even for the dead. So, sorry SIT applying Microeconomists looking for a patch to Max U, self-interest theory: Putting the utility of the dead in the utility function, well, it does not work. Yet, empathy-with, sympathy-with can influence economic choices.
A case in point: Because of empathy-with on the way to sympathy-with even the dead, we might be willing to self-sacrifice in the form of paying some tax T to fund the police who could have stopped the robber, and temper the number of further deaths by robbers, from causing the death of the person robbed. Empathy-with brings the shared other-interest into play to temper the self-interest, with a bit of sacrifice in both domains. That is to say, spending too much on police, well, no, there are limits, so we also sacrifice a bit of potential gain in the shared other-interest --- some will still get robbed, and some will die --- on the best path oZ.
Which reminds a MetaEcon of another key idea: So, sorry SIT in Microeconomics thinkers, especially the Libertarian Branch. Not paying tax T is not some sort of relief from a dastardly disease, but rather paying that tax T is an expression of the shared other-interest in the joint private & public- good (like fewer deaths from robberies, and Pandemic vaccines for the public health). Paying tax T, while a sacrifice in self-interest, is a legitimate and essential part of achieving economic efficiency, good balance in private & public good, in this case in the matter of providing enough funding for the public good produced by a public police department.
And, another aside: Perhaps the dead fellow Travelers represented in mass extinction of many species on the Spaceship, including loss of Human life caused by extreme flooding and hurricane-wind weather events, caused by the excessive loading of carbon dioxide into the ecosystem and atmosphere, could also stir some paying of tax T to fund the Environmental Protection Agency? It is about empathy-based, shared other-interest, it seems, so, just asking.
It is the empathy-with based other (shared)-interest about which Adam Smith is trying to teach us. It is about doing the right thing, in consort with all Travelers on the Spaceship on which we Travel around the Sun, together. It is that other-interest which is reflected in the moral sentiments which must be brought into play to temper the arrogance and horror of self-interest only. Paradoxes, puzzles, mysteries can now be easily solved.
Use Dual Interest Theory in Metaeconomics to Make Sense of Adam Smith Claims
As alluded to, one can make easy sense of what Adam Smith had in mind through using Dual Interest Theory (DIT) in Metaeconomics (see What is Dual Interest Theory) because it has a placeholder for the moral sentiments, the shared other-interest. DIT also has a placeholder for SIT, so, we do not have to "start-over" in economic reasoning; the matter is more about transcending SIT as in the notion of "Meta." In particular, DIT still has a placeholder for the SIT focus on self-love --- the arrogance of self-love, the self-interest only --- in the set of self-interest indifference curves around path 0G of Figure 1. Think selfish on path 0G.
Adam Smith would not stop there, it being a horror and all: So, we also need to represent “the inhabitant of the breast, the man within, the great judge and arbiter of our conduct. …the eye of this impartial spectator” in a set of other (shared with the other, yet internal to the own-self)-interest around path 0M of Figure 1. Think selfless on path 0M. Think moral sentiments and the shared ethic that evolves from the effort of the impartial spectator within as represented on path 0M. Notice, too, that each person is jointly selfish & selfless, represented in a joint arrogance & sentiment, at every point in Figure 1. It seems Adam Smith would be pleased, as the "&" also integrates and otherwise recognizes the jointness in the Wealth of Nations & Moral Sentiments books.
Notice, too, that Adam Smith Rationality can now be demonstrated, arising as it does on path 0Z. On said rational path, a person achieves good balance in the ego-based self-interest from path 0G & empathy-based other-interest from path 0M. The arrogance is humbled, and the horror eliminated, on the rational path 0Z.
Notice said rational path 0Z is influenced by the value V (incommensurable value) coming out the wider Community of shared other interest represented in Figure 2, wherein one balances the interests. The incommensurable value V of Figure 2 works to temper the price P of the Market in Figure 1. Also, the price P from the Market Forum works to temper the value V in Other Forums of the Community:Government.
Still at base, each person is independently and freely pursuing the own-self interest, but it is an own-interest in the spirit of a true classical liberalism, with ethics left in. DIT allows for the pursuit of own-interest by a Human with the ethics left in, whereas SIT leaves ethics out, and, in the hands of Libertarians, one is opposed to ethical reflection. It all works as long at the shared ethic is formed, and, then, acted upon with sufficient self-control over the arrogance and horror of self-interest only. And, if not, well, then Community:Government regulation and control may be necessary, with the shared ethic embedded in the law, in the Insitutions in general, to give context.
Back to the Trolley Problem and the Other Puzzles and Mysteries about Why Sacrifice
So, on the Trolley Problem. When one is aware of the alternatives, well, the path 0G is no longer an option, but one would like to think it is still in play. So, we now have two path 0M paths, as said paths involve the connection with the other. Think of a path 0M representing one other person on a Track 1. Think of another path 0M closer to the horizontal axis representing five people on a Track 2. If one has a choice, well the best path 0Z would generally be the one closer to the preferred path 0G. So, the one person in the Track 1 option is chosen, as less sacrifice self-interest is achieved. A bit of self-interest is sacrificed, but not as much as going onto Track 2. And, it is not benevolence, but rather it is about doing the moral and ethical thing, which always entails of a bit of sacrifice in self-interest: Every point on path 0Z does represent some of said sacrifice, and, some sacrifice in the domain of other -interest, too.
And, on the little finger problem in the context of the Trolley, by Munger (from the Podcast, but also from Adam Smith Discovered (and Solved!) the Trolley Problem | AIER ):
Scenario #4: same situation (hurtling trolley, no brakes) … except the current track has 100 million people on it, and the diverted track has your little finger stuck on the rail. If you do nothing 100 million people will die, but if you divert you will lose your little finger.
When the person is you, as in potentially losing a little finger on the diverted track, and you have a choice as to which track the Trolley takes, well, now one would prefer it was not happening at all on some path 0G, but given the options, one will choose a path 0Z, the diverted track, where upon one loses that finger to save the 100 million. Path 0G has been “corrected by the eye of the impartial spectator” bringing the person onto path 0Z, a path of self-sacrifice represented in a lost finger.
And, on dropping the atom bomb on Japan (another case pointed to in the EconTalk Podcast), bringing WWII to an end, path 0M shared with the American people was preferred, with only minimal sacrifice in the self-interest path 0G of those bringing the bomb forward (soldiers in combat always sacrifice, a bit, to serve the shared other-interest). Path 0Z became that path, with millions of Japanese people, lots of noncombatants being sacrificed, while joining the shared other-interest with all Americans on path 0Z to end the war sooner rather than later. A great deal more loss in self-interest represented in lost American solider lives would have occurred if operating on a shared other-interest curve with non-combatant Japanese on a path 0M near the horizontal axis.
Back to Adam Smith, relating to a massive earthquake or some such in a distant land --- Smith’s example was in China, but it is easy to extrapolate to the 2023 earthquake in Morocco, and the massive flooding and collapse of the dams in Libya --- with thousands losing their lives. Well, ignoring the matter, or even just casually engaging the matter, we stay on path 0G. Totally embracing the problem, we might sacrifice a great deal of self-interest in a move to path 0M. Realistically, we choose some path 0Z, perhaps joining with many others donating a small, but reasoned amount to some Spaceship-wide relief organization that will work to help the affected people. Once a person is aware, described in empathy-with the other, peace of mind is possible only on some path 0Z.
The EconTalk Podcast also explored the drowning child and potentially ruining a pair of expensive shoes to save said child. The Peter Singer Effective Altruism frame was also explored. In each case, think in terms of tempering self-interest a bit by moving away from path 0G toward a best path 0Z, acknowledged the shared other interest with doing the right thing by a drowning child and helping poor children in less developed places like Africa by putting on a less expansive birthday party for one’s own-child. The conscience arising on path 0M works to temper the path 0G onto a reasoned, facts & ethics based sufficient reason, path 0Z.
And, then there is the matter of a pregnancy, with the child in breach, and back to the ancient story of Caesar. It was Caesar who had impregnated the women, but a woman of no consequence, as a commoner or some such. So, the Caesarian Section, in the case of Authoritarian Caesar, pay no attention to the shared other interest with the woman on some path 0M, and satisfy Caesar on the self-interest only path 0G. C-section the baby out, and, the woman dies. The best decision is all about the shared other-interest, tempering the self-interest, which in this case was not done as Caesar operated without empathy-with the other, the horror of self-interest playing out in said C-section.
And, in general, the impartial spectator within arising out of the starting point of the empathy-with the other, well, said spectator always takes you away from path 0G which represents little to no self-sacrifice --- the arrogant path of self-love and self-interest only --- to the better path 0Z. It is about striking good balance, one that gives peace of mind, a good balance in the joint arrogance & sentiments, person & community, ego-based self-interest & empathy-based other-interest. As alluded to earlier, it is also that empathy-with the other that reminds us “…that we are but one of the multitude, in no respect better than any other in it; and that when we prefer ourselves so shamefully and so blindly to others, we become the proper objects of resentment, abhorrence, and execration (Smith 1759/1790, loc 2637).”
We can now also now make sense of the Be Loved & Be Lovely notion, highlighted in the EconTalk Podcast, and another way that Adam Smith framed the matter. So, while we can Be Loved on path 0G (people in awe of our wealth, accomplishments), or we can Be Lovely on path 0M (giving in, giving away too much), we can strike a good balance in the Be Loved & Be Lovely path 0Z. And, as alluded to earlier, notice that on path 0Z we give a bit in each domain of interest: Altruism means a bit of sacrifice in both arenas.
Self-command Must Also Be Operant
Self-command, and the matter of the involvement by the Community:Government in finding and holding to the best path 0Z, well, another arena that must be addressed. The matter of choosing path 0Z is not only by reflection involving the impartial spectator (and, the content of that impartial spectators conversation might go in many Other Forums), it is also about self-command to choose and then stay on the path 0Z.
It is primal to stay on path 0G, such that tempering the own-self onto path 0Z, well, that takes discipline, self-control, and self-command as Adam Smith fully realized. It is also the reason that sometimes outside regulation and control (i.e., externalities arise because of the lack of empathy-with the other) from the larger Community:Government (the ":" working hard to point to Community embedded within a truly Representative, and ethical, Government) is also essential, when self-command to do the right thing fails. The impartial spectator, the beast in the breast, is about the ethic, the moral and ethical dimension, and, when the person fails to form and act on same, well, some regulation by the Community:Government is often needed.
Also, some tax T to reflect value V may also be needed, in order to bring the wider system onto path 0Z. Failures in self-command cause externalities, and, also throw the balance in private & public goods too far to the private good side. Good balance in essential to economic efficiency, so, again, SIT in Micreconomics gets it wrong, seeing no role for the Community:Government other than in enforcing property rights, and, well, in maybe supporting the Socialist Military? How about tempering the Scroogists? Adam Smith would agree that Community:Government plays a key role, especially when self-command fails. So, DIT solves the mystery: Itwas raised by Russ Roberts during the Podcast, as in why do we have externalities? Well, simple: Externalities arise from insufficient empathy-with the other on the way to acting on that which the other can go along with (like sustaining Spaceship capacity to process carbon dioxide releases at a reasoned level, not in excess), and, even if the person has that ethic, recognizing that perhaps too often self-command, self-control fails to keep the person on the best, economically efficient path 0Z.
New News for What it Means to be Economically Rational, Old News to Adam Smith
Overall, economic efficiency, political (economic) stability and peace, and, yes, overall happiness is only possible on the only rational path 0Z. SIT in mainstream (Micro)economics gets it wrong. Adam Smith got it right. DIT in Metaeconomics gets it right. Adam Smith was a MetaEcon. It was, and still is, about tempering the self-interest, bringing the arrogance down to something the other can go along with. Ethics need to be left in, as one acknowledges people as Humans not Econs.
It was not about Econs involved in Max U, but rather about Humans finding good balance in their lives on some path 0Z. The moral sentiments, the shared ethic with the other, are key. The conscience, the great judge and arbiter within, well, yes, that part of the person tempers the arrogance of self-interest. People join in shared interest with others, and, when said joining-in is not done, well, some role for outside influence if not outside regulation and control is justified. Paradoxes of self-sacrifice solved. Puzzles and mysteries solved.
Use DIT not SIT.
References
Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Cannan, E. (Editor). New York: Random House, 1776/1789 (digital access at www.feedbooks.com).
Smith, Adam. The Theory of Moral Sentiments. Macfie Rafael, D.D. and A.L. Indianapolis, Indiana: Liberty Fund, Inc., 1759/1790 (digital access at digireads.com).