rational self-interest

hello all.

Harking back to the days of good ole' Mr. Adam Smith and his Wealth of Nations, the theory of rational self-interest is the theoretical backbone of the capitalist mode of production. The theory of rational self-interest holds that humans are basically driven by greed, and will seek to further their wealth if given the opportunity. It also holds that far from being a negative thing, this rational self-interest is what drives the economy and creates wealth. The best outcome is acheived through everyone doing whats best for himself.

Does this theory really describe what goes on in the real world? What about the theory's inability to explain departures from this rational self-interest (which happen all the time)? Discuss, good people!

Originally posted by General Zapata
hello all.

Harking back to the days of good ole' Mr. Adam Smith and his Wealth of Nations, the theory of rational self-interest is the theoretical backbone of the capitalist mode of production. The theory of rational self-interest holds that humans are basically driven by greed, and will seek to further their wealth if given the opportunity. It also holds that far from being a negative thing, this rational self-interest is what drives the economy and creates wealth. The best outcome is acheived through everyone doing whats best for himself.

Does this theory really describe what goes on in the real world? What about the theory's inability to explain departures from this rational self-interest (which happen all the time)? Discuss, good people!

It's not only a human trait most living creatures are programmed that way.

The squirrel hides nuts not for his fellow squirrels----yet by doing so he or she is inadvertently planting the seeds for more nut producing trees----which will benefit other squirrels, other animals and humans.

That is the beauty of self-interest and Capitalism, the benefits are perpetual.

Apparently Mr. Adam Smith have not met great people like Mahatma Gandhi or Martin Luther King Jr. or Mother Theresa or the people who dedicate their to purely caring for the poor and living in poverty.

Clearly those people show that Mr. Adam Smith's theory is nothing but trash.

Surf

Is it really nothing but trash? I have to disagree. This theory is not talking about "human values" and how we treat each other as people. It's not made for people like good old Mama T. Rational self interest is a business philosophy- and I believe it's solid. The point of business is to gain. Business and charity are not the same thing. With one man's gain, others around him will either lose or gain, depending on whether they are a buyer or seller. Other sellers, the man's competition, wil strive to make their business even better so that THEY will gain, etc. etc. etc.

It's a wonderful theory for economics, too bad it's based on how greedy we are as humans.

but surely a wonderful theory can only be so if it explains this fully enough to be relevant. The theory of rational self-interest plainly does not do that. What about all these businesses that had pledged money for the tsunami appeal. According to the theory, such things should not happen. After all, how do donations benefit the business?