Ethical Realism

May 19, 2011

Against Ethical Egoism & The Invisible Hand

Some people think we ought to only do what is best for ourselves, but I will present evidence that this is a misunderstanding of ethics. One argument for capitalism, libertarian justice, and ethical egoism is the invisible hand argument—if we do what is in our personal best interest, it will lead to a prosperous society. There is some truth to the invisible hand argument, but it’s not infallible. There are times that self-interest can lead to ethical actions and self-interest in a capitalistic society can lead to prosperity much of the time, but not always. I will discuss ethical egoism, the invisible hand, and reasons to reject ethical egoism and the invisible hand argument: (1) People who do wrong almost always do it because they think it’s in their self-interest, (2) what is in our self-interest isn’t always ethical, and (3) people live in an interdependent relationship.


I want to discuss ethical egoism of the sort I want to object to in addition to what might be the best argument for ethical egoism—the invisible hand argument.

Ethical egoism

Ethical egoism doesn’t say that we have no choice but to act in our self interest like “psychological egoism.” Instead, it says that we ought to only do what is in our personal rational self-interest. This self-interest should be long term. For example, an ethical egoist realizes that I ought to go to the dentist to get a cavity removed even though it causes me pain because it can prevent even more pain in the future.

Ethical egoism is not a stranger to philosophy. Plato, Socrates, Aristotle, Epicurus, and perhaps even the Stoics all seemed to endorse a sort of ethical egoism. They thought that we ought to be ethical precisely because it was in our rational self-interest and was necessary to be a happy person. Perhaps it’s our natural empathy or care for others that makes it so important for our self-interest to care for others. However, they thought that one’s personal self-interest was intimately tied to the interests of others. We ought to help other people and look out for their interests because we are interdependent.

The ethical egoism of the ancient philosophers was not pure ethical egoism because they all stressed the importance of helping other people, and my main dispute is not against that sort of egoism. I mainly want to provide evidence against a more pure form of ethical egoism that requires us to only look out for our personal self-interest rather than the interests of others. Even these egoists will advocate helping other people when we can expect reciprocity and financial benefits from doing so, but this form of egoism can’t require us to care for others for their own sake, out of empathy, or to avoid guilt. We could assume that no one at all should be motivated in such “altruistic” ways. We could call this more pure form of ethical egoism “profit motivated ethical egoism.”

I want to make it clear that Robert Nozick‘s libertarian theory of justice does not necessarily support ethical egoism. Nozick says we have property rights and a right to noninjury—no one can take our legitimately attained property or harm us without an overriding reason to do so. (Perhaps some criminals will have to be punished and they could be injured in various ways.) Property rights and a right to noninjury are not necessarily compatible with ethical egoism because it might not be in our self-interest to respect other people’s rights. Most thieves agree that violating a person’s property rights can potentially be in someone’s rational self-interest.

The invisible hand

The invisible hand is an economic theory that might be the best argument for capitalism, libertarian justice, and ethical egoism. The invisible hand claims that we should expect a prosperous society from rationally self-interested individuals motivated by profit who compete for business. The most efficient and productive businesses will make the most profit while simultaneously providing consumers with affordable goods.

The invisible hand is an argument for capitalism (a free market economy) because it claims that we should expect prosperity from capitalism assuming that people are rational egoists, and we expect people to be somewhat rational and selfish.

The invisible hand is an argument for a libertarian theory of justice insofar as it requires a free market with minimal government interference.

The invisible hand is an argument for ethical egoism because if the invisible hand argument is sound, ethical egoism within a capitalistic economy leads to prosperity. Ethical egoism is endorsed by the invisible hand argument insofar as it requires people to act on the profit motive, have rational self-interest, and has absolutely no need for empathy. The invisible hand argument for ethical egoism is actually a utilitarian justification for a non-utilitarian way of life. It could be that utilitarianism or some other moral theory is ultimately true, but ethical egoism could be used for pragmatic reasons because everyday decision making is not necessarily compatible with a complected moral theory.

The invisible hand does have some plausibility, but it’s not necessarily infallible. The invisible hand explains why it’s likely that many good things can emerge out of ethical egoism, libertarian justice, and capitalism but it can’t guarantee that bad things will never emerge. It’s not even clear that the invisible hand even guarantees that a free market (capitalistic economy) will lead to better results than the alternatives. I will explain why we have good reason to doubt that ethical egoism (and the invisible hand) will always lead to good results rather than bad ones.

Objections to ethical egoism & the invisible hand argument

One problem with “profit-motivated ethical egoism” is that it doesn’t properly identify right and wrong behavior, and one problem with the invisible hand is that it doesn’t guarantee that people behave ethically. Even Adam Smith, the person who invented the invisible hand argument, didn’t think it was infallible and agreed that some government institutions (and regulations) should exist. I will discuss three different reasons to reject both ethical egoism and the invisible hand. These reasons are not necessarily sufficient to prove either false, but they are important considerations against them both.

1. People who do wrong do it because they think it’s in their self-interest.

This objection is a practical one. People who actually hurt others often do so because they think it’s in their self-interest. Thieves expect that they can gain from stealing from others. CEO’s that decide to dump their company’s toxic waste in a community and endanger people’s lives often do it to make the company more profit and reap the rewards as a result.

It’s true that people don’t always know what’s in their rational self-interest, so sometimes selfish decisions actually hurt the person making the decision. For example, a company might refuse to hire a black person for a job out of prejudice when the black person could be the most qualified and do the best job as a result.

However, our ignorance still makes it impractical to expect people to behave ethically when we encourage them to be selfish by advocating ethical egoism or to make profit in a free market without any consideration about others.

2. What is in our rational self-interest isn’t always ethical.

Rational self-interest not only can be unethical, but rational self-interest within a free market can also be unethical. Consider the following:

  1. It seems plausible to think a successful thief really would benefit themselves at the expense of others. Smart criminals can make sure to only break the law when they are very unlikely to get caught. A wealthy thief who steals jewelry from a poor person’s home is doing something morally wrong, even if she knows she won’t be caught.
  2. It might make sense from the self-interest of a company to be discriminatory when the public is racist and it will hurt businesses to show racial tolerance. A company could refuse to hire the most qualified black waiter because they could lose customers as a result, but such a decision is still morally wrong.
  3. It is often more profitable for a company to pollute more rather than less, but it can be nearly impossible to prove that the pollution is responsible for any injuries in particular. Such pollution could harm people just to save the company a negligible amount of money, but such a decision would be morally wrong.
  4. Our self-interest often conflicts with the interests of nonhuman animals, but it seems plausible that the lives and interests of animals are worthy of consideration. A company that severely harms dogs to test new cosmetics products seems to be doing something immoral because something of very little value is being used as a justification to cause severe harm to dogs.

The above are paradigmatic cases of immoral behavior because they all involve people hurting others to help themselves without a compatible benefit being attained. The fact that it can be in our rational self-interest to hurt others without a good justification implies that ethical egoism is false because every serious moral theory and theory of justice will agree that it’s usually wrong to hurt other people (and probably dogs as well). Additionally, it proves that the invisible hand argument is flawed because we should expect it to lead to immoral behavior, such as the examples above. In each case the immoral act was motivated by self-interest.

Some people will defend ethical egoism and the free market from the above counterexamples in the following two ways:

First, some people think we can force people to behave themselves by punishing those who hurt others, but it seems unlikely that this will prevent all immoral acts. Surely punishment can rationally deter crime from the point of view of rational self-interests some of the time, but (a) sometimes we know we will probably get away with our crimes and (b) laws will never be able to stop people from harming or risking the well being of others because there is an unlimited number of ways we can hurt people and we can’t have a law for every single way. Additionally, even if we could have a law to make it illegal to hurt people in every single way possible, it’s often impossible to prove that someone breaks the law. For example, it’s nearly impossible to prove in a court of law that a company’s pollution harms you; and even if you could prove it, there might be hundreds of companies that added to the pollution and contributed to your injury.

Second, some people insist that we can “take our business elsewhere” based on people’s immoral acts and their poor reputation. I agree that we should often do this when possible. However, we have no way of knowing when sneaky people do immoral acts and it’s often impossible to know when people do something immoral for the same reasons given above— (a) we simply don’t know all the ways people can hurt each other and (b) sometimes it’s nearly impossible to prove that an action hurts anyone. Moreover, a person’s reputation is a notoriously bad way to know if they are ethical or not. Reputation is not based on scientific criteria and relies on highly flawed reasoning (such as anecdotal evidence).

3. People live in an interdependent relationship.

The relationships we have seem to produce obligations that wouldn’t exist otherwise. For example, raising a child implies that you have accepted the obligations involved in caring for the child—providing food and shelter and so on—because the child is so dependent on their caregivers.

However, it’s not merely personal relationships that can bring about obligations. We have a relationship with others in our society—mutual dependency—that seems to plausibly provide us with certain obligations towards others beyond the profit motive and rational self-interest:

First, few people now live on farms where they can provide for themselves. Most of us now depend on the products and services of others to survive. Second, we must often rely on the honesty and good intentions of others when we do business with them because (a) few of us are capable of assessing the quality and safety of products and services and (b) it often requires tremendous resources to test products for quality and safety. Such judgment can require expertise and resources beyond what many of us can attain. For example, some scientists might know if food is poisoned by pesticides through proper experimentation, but most of us lack that expertise and such experimentation requires a lot of time and resources. Both of these facts imply that the people we buy from have a responsibility to give us what we pay for—products and services of sufficient quality and safety standards. Companies can often get away with giving us less than what we pay for and we often never know when we are cheated, so we depend on the good intentions of others rather than merely their profit motive or rational self-interest.

The fact that we have obligations to each other implies that we ought to act in other people’s interests some of the time rather than merely our own self-interest—even when it would be less profitable to do so. That implies (a) that ethical egoism is false because it would say we should never act in such a way and (b) that the invisible hand is flawed insofar as we should expect people to harm each other in a free market even when they act in their rational self-interest.


There might be some sort of ethical egoism that encourages us to have empathy, help others, and look out for the interests of others, but the egoism endorsed by the “invisible hand” is not that sort of egoism. Instead, it requires a more selfish and pure form of egoism. This kind of egoism is impractical because we generally hurt others precisely when we think it’s in our self-interest to do so, and it seems false because it seems unlikely that hurting others would never be in our personal self-interest (even if we live in a free market as the invisible hand argument requires). Finally,ethical egoism and the invisible hand assumes that profit motivated self-interest is enough to bring about ethical behavior, but the interdependent relationships that exist between producer and consumer implies that companies have responsibilities beyond self-interest; they have obligations to their customers beyond making a profit.

My point is not that ethical egoism and the invisible hand are completely false. There might be some truth to these theories. However, we do have reasons to reject these theories as they are often presented.


  1. I’ll address what I believe is the core of the post, the four examples meant to demonstrate how acting in one’s rational self-interest is morally wrong. The problem is that those only take into account the immediate material benefit of the supposedly selfish acts.

    Those immediate material benefits are not ends in themselves; stealing or making money is only the means to attain a higher end: happiness, which is genuinely attained by the achievement of one’s rational values. Stealing, violating the rights of others or turning one’s mind over to an irrational mob is only made possible by living off the productive work of others, reducing a thief or a moral reprobate to the status of a helpless child.

    A person may indeed never get caught committing an immoral act, but that does not change the fact that he or she would have attained greater happiness by earning success in a way that does not contradict other core values, such as independence and self-honesty, that make genuine happiness possible. So we should not confuse ill-gotten gains as rewards but as punishments, to paraphrase Craig Biddle.

    Comment by Justin Lee — May 22, 2011 @ 9:21 am | Reply

    • Justin,

      Thank you for the thoughtful post. I pretty much agree with what you’re saying if you take egoism to be the sort advocated by the ancient philosophers. I didn’t try to disprove that a person who cares about people should be moral to others. I only tried to disprove the profit-motivated sort of egoism as I described it.

      It’s not obvious that happiness always coincides with morality. It could be possible for a person to be happier while being a successful thief with a rich personal life. We might need to care for our family and friends, but maybe not strangers. What I said above doesn’t give us a reason to disbelieve in the egoism you describe, but it is still questionable to me.

      Comment by James Gray — May 23, 2011 @ 1:23 am | Reply

      • It’s not obvious that happiness always coincides with morality.

        Just so I am clear: I do not think that achieving happiness is the standard of morality, but it the highest reward possible for living a moral life.

        It could be possible for a person to be happier while being a successful thief with a rich personal life.

        It may indeed be the case that such a person experiences some degree of pleasure (of sorts). Doing so would require engaging in a seeming endless series of self-delusions meant to deny the fact that the thief is not worthy of the life he or she leads and does not actually deserve the affection and respect others have granted. That same person would lead a happier life by living an honest, non-contradictory existence. Every aspect of the supposedly “rich personal life” would be a constant reminder of his or her parasitism. I would call such experience something, but not “happiness.”

        Comment by Justin Lee — May 24, 2011 @ 2:02 am

  2. Justin,

    You said the thief can’t be happy without self-delusion because “[d]oing so would require engaging in a seeming endless series of self-delusions meant to deny the fact that the thief is not worthy of the life he or she leads and does not actually deserve the affection and respect others have granted.”

    I don’t know that this is right, and it’s not obvious that it can be justified from the perspective of “ethical egoism.” If a person should only worry about their own happiness, then why should they feel bad for stealing from others?

    Consider that most people think that eating nonhuman animals isn’t wrong, but it’s possible that it is wrong. Let’s assume it is. Perhaps people who eat animals are “parasitic” for eating animals and don’t deserve happiness, love, or respect. Is it therefore impossible for non-deluded people to be happy?

    I agree that we ought to care about people and animals assuming that they have intrinsic value, and we ought to be happy based on our good deeds, virtue, and worth. That doesn’t mean I endorse ethical egoisim.

    Comment by James Gray — May 24, 2011 @ 3:45 am | Reply

    • Consider that most people think that eating nonhuman animals isn’t wrong, but it’s possible that it is wrong. Let’s assume it is. Perhaps people who eat animals are “parasitic” for eating animals and don’t deserve happiness, love, or respect. Is it therefore impossible for non-deluded people to be happy?

      I would agree that in a certain context (such as eating another person’s animal), eating an animal would be wrong. As for the question of whether a deluded person can be happy, he or she cannot be happy to the fullest or as happy as he or she would have otherwise been. It is the achievement of his or her values that brings happiness. (Even a deluded person must achieve life-promoting values in order to remain alive.) In a certain respect, a person can choose to pursue and ultimately achieve values that are not actually life-promoting and experience a certain amount of satisfaction or joy momentarily for doing so. But achieving life-promoting values that are aligned with one’s nature as a volitional, conscious and productive being are what make life sustainable and flourishing. As for who deserves love and respect, people who engage in deception do not deserve the level of love or respect that others have been deceived into granting.

      I would further state that simply living a rational life can make one happy. Rationality is the precondition for living life as Man (in the capacity as Man), and a rational person knows that a joyous and benevolent life is possible (if in fact it is possible in that circumstance). In that way, it sort of sets a floor (or baseline) that a person can reference when he or she is faced with difficult circumstances.

      In any event, I appreciate your blogging about such an interesting topic; I look forward to reading more.

      Comment by Justin Lee — May 25, 2011 @ 12:04 am | Reply

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