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Wednesday, January 17, 2018


Those prone to castigate capitalism as a greed-based economic system would do well to look past demagoguery and invoke objectivity. Historical precedent will help.

Alexis de Tocqueville is one of the earliest observers and chroniclers of the American scene. He received a commission at the age of 25 from the French Minister of Justice to visit the United States, to observe, and to report back on the latest innovations in America’s prisons. His personal motivation, however, was to discover the inner meaning and actual functioning of America’s prosperous democracy.

De Tocqueville landed in America on May 11, 1831. Between then and his departure on February 20, 1832, he traveled extensively throughout the new nation taking copious notes. Ultimately his notes and letters became the basis for his work “Democracy in America” published in 1835 (Vol. I) and 1840 (Vol. II).

De Tocqueville’s observations on the widely shared consensus of self-interest exhibited by Americans corroborates what Adam Smith wrote in 1776 in his “Wealth of Nations.” Smith plainly states his point in addressing self-interest. “He will be more likely to prevail if he can interest their self-love...and shew them that it is for their own advantage to do for him what he requires of them....It is not from 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....”

Illustrative citations from de Tocqueville’s “Democracy” are taken from Vol. II, Second Book, Chapter VIII. “I have already shown...by what means the inhabitants of the United States almost always manage to combine their own advantage with that of their fellow-citizens: my present purpose is to point out the general rule which enables them to do so.”

Both Smith and de Tocqueville saw self-interest distinct from selfishness and greed. They saw that it formed the positive root of capitalism.

Continuing with de Tocqueville’s observations, “They have found out that...man is brought home to himself by an irresistible force;… and, losing all hope of stopping that force, they turn all their thoughts to the direction of it. They therefore do not deny that every man may follow his own interest, but they endeavor to prove that it is the interest of every man to be virtuous.”

Self-interest is a primary motivation as individuals seek to improve their standard of living by directing their effort in a free market.

“The doctrine of interest rightly understood...is as often asserted by the poor man as by the rich.”

Throughout the one hundred seventy-five years following de Tocqueville’s observations, the motivation of self-interest brought forth new technologies and products. Items such as dishwashers, telephones, automobiles, and microwaves originally developed as luxury items eventually became affordable necessities to untold numbers of Americans. Employing this understanding of self-interest, it was not long before America became a world economic leader.

“The Americans...show with complacency how enlightened regard for themselves constantly prompts them to assist each other....”

By pulling together everyone prospers.

“The principle of interest rightly understood is not a lofty one....By its admirable conformity to human weaknesses...the principle checks one personal interest by another.”

People do act selflessly. By the 21st century 70% of households gave to charities averaging 2% of household income. At the same time 55% of the population eighteen years of age and over did volunteer work averaging 3.5 hours per week.

“The principle of interest rightly understood by itself...cannot suffice to make a man virtuous, but it disciplines a number of citizens in habits of regularity, temperance, moderation, foresight, self-command; and, if it does not lead men straight to virtue by the will, it gradually draws them in that direction by their habits.”

People, even when they know what’s best for them, lack self-control. We sometimes eat, drink, and spend too much. Though people have self-control problems, they evidently are aware of them. Accordingly, they adopt diet plans, join self-help groups, and pay ahead on taxes seeking a refund later. It is in their self-interest.

“The principle of interest rightly understood perhaps prevents some men from rising far above the level of mankind; but as great number of other men, who were falling far below it, are caught, and restrained by it.”

Capitalism may not be perfect, but millions of individual decisions based on self-interest in a free society beats relying on a government bureaucracy, committee, commission or politburo deciding who gets what, when, how much and at what price in the distribution of goods, services and accumulated wealth.


Dennis M. Patrick can be contacted at (JavaScript must be enabled to view this email address).


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