Fred Feldman on the Invisible Hand Argument

Another line of argument for ethical egoism is based on the notion that humanity as a whole would be better off if individuals stopped trying so hard to be "moral". It is widely thought that better results for all of us would ensue if each of us were to mind his or her own business. If each person focusses on his or her own long-term self-interest, the group as a whole will be best off.

This approach is reminiscent of Adam Smith's notion of the "invisible hand". Just as Smith suggested that the economy does best when individuals rationally pursue their own economic welfare in a free market, so the egoist might claim that a social group does best when members freely pursue their own long-term self-interest. This idea seems to be at the heart of this remark from Robert G. Olson: "The individual is most likely to contribute to social betterment by rationally pursing his own best long-term interests."

Here's one way to formulate the argument:

The "Invisible Hand" Argument for EEh
 
1. The community as a whole is best off if each member acts so as to maximize hedonic agent utility.
 
2. If (1), then each individual ought to act so as to maximize hedonic agent utility.
 
3. If each individual ought to act so as to maximize hedonic agent utility, then EEh is an acceptable normative theory.
 
4. Therefore, EEh is an acceptable normative theory. [1,2,3 MMP]

Line (1) of this argument is very controversial. It embodies the idea that when each seeks his own welfare, by some miraculous good luck, the community will be best off. In fact, there are arguments designed to show that (1) is false. The most famous of these is known as "The Tragedy of the Commons". A relevant version of this concerns the fisher-folk in Gloucester. There are lots of fisher-folk; there are lots of fish in the outer banks; each fisher-person want to maximize his catch of fish; no fisher-person can influence the behavior of any other fisher-person. Each fisher-person catches as many fish as he can until the stocks are depleted and everyone goes bankrupt. The community is worse off. They would have been better off if each had reduced his catch.

Look at it this way: Each fisher-person has the choice of either (a) catching all the fish he can, or (b) reducing his catch. Each reasons as follows: "If others are going to reduce their catch, then I am best off catching all I can. I'll make more money, no one will be the wiser, and the fish will not be depleted. (This may be called "free-riding on the forbearance of others.") If others are not going to reduce their catch, then I am best off catching all I can as quickly as possible--why should I voluntarily reduce my catch when no one else is going to do so? After all, the stocks will soon be depleted anyway. Therefore, no matter what others are going to do, I should catch all I can as quickly as possible."

This fisher-person's line of thinking is perfectly reasonable and based on his correct calculation of his own welfare (evaluated hedonistically if you like). But when all fisher-folk make the same judgment, and each does what's best for himself, the community is not best off. It is much worse off than it would have been if each had sacrificed his own welfare for the community good. So the argument fails.

Another serious difficulty with the argument concerns premise (2). Premise (2) seems to amount to an attempt to explain why we should maximize hedonic agent utility. The proposed answer is that we should behave in this way because doing so will make the community as a whole best off. Yet this consideration (that it will make the community best off) surely ought to be irrelevant to the consistent egoist. Why should the egoist care about whether his behavior will benefit the community as a whole? His own theory implies that this consideration is morally irrelevant. What's relevant, on his view, is whether his action will lead to the maximization of his own welfare.

Indeed, if the appeal to the welfare of the community were justified, then we would have reason to accept a competing moral theory--the theory that right acts are those that lead to the maximization of community welfare. Such theories are generally taken to be forms of utilitarianism, and these are apparently inconsistent with egoism.