In this season of giving, Kevin Schmiesing looks at another form of exchange — trade. He observes that ethical commercial activity “is not an exercise in selfishness, but the practice of properly ordered self-interest, which is of necessity tempered by the wants and needs of others.”

Read this commentary over at the Acton website and then come back to share your comments.


  • Dr. Charles W. Davis

    “In this season of giving, Kevin Schmiesing looks at another form of exchange — trade. He observes that ethical commercial activity ‘is not an exercise in selfishness, but the practice of properly ordered self-interest, which is of necessity tempered by the wants and needs of others.’” –Brittany Hunter, Acton Commentary

    So, we can infer, ‘unethical’ commercial activity is also possible, plausible, and even probable, including slavery, theft, prostitution, and Ponzi schemes, but that would be activity defined by selfishness, rather than ‘properly ordered self-interest tempered by the wants and needs of others.’

    The satisfaction of self-interest in one’s own work at least partly through the satisfaction of the self-interest of others in their complementary work is what Adam Smith alludes to by the compressed figure of the ‘invisible hand.’ He was naming a positive law that governs oeconomic activity in the sort of free market comprised of ethically guided entrepreneurs that he knew.

    A good society must be built with the Invisible Hand. By this oeconomic law, one’s private work [like this blog!], though performed through hopefully enlightened self-interest, becomes at least potentially beneficial to others; by the same oeconomic law, and through the same sort of enlightened work in perhaps the same intellectual marketplace, one may with enlightened eyes or ears receive a similar gift from others.

    The medium of exchange does not change the socializing logic of the Invisible Hand, even if the medium happens to be electronic or paper money: strangely enough, as we are re-discovering in late 2008, paper money cannot facilitate exchange without the underlying warrant of good faith and credit. The visible dollar signs, in economic expansion and retraction, obscure the underlying work of the Invisible Hand, which as an oeconomic law persists with the labor of one being exchanged for the labor of another, even in under-developed markets, political protectionism, or economies in crisis. The social market must operate by trustworthy regulations agreed to by trustworthy participants.

    Indeed, even charity works in part as an extension of this positive social force. The giving of gifts means at least that one is not merely a selfish grasper, yet the making of the gift should be an enlightened work by one’s self. The receiving of gifts acts presumptively also to bring one into an oeconomy built through the work of others, wherein the logic of gift-giving invests a private person with social relationships. The gift is an active symbol of the spiritual ends of the lawful ordering of human nature of which the Invisible Hand is a part: namely, faith, hope, and charity.

    A bad society, in contrast, ignores the social demands of the Invisible Hand (by lying, cheating or stealing) or grossly violates the lawful ordering of human nature (by slavery, prostitution or murder, for instance, by a shortsighted and unenlightened refusal to engage in reasonable exchanges that would ultimately benefit both parties, and by the tyrannical imposition of one party’s will on the entrepreneurial freedom of others).

    Bad societies operate through fear, not love, and they hinder most people’s proper pursuit of self-interest in a manner which benefits the other parties in the exchange of goods and services.

    Instead, one’s economic activity is merely the pursuit of immediate self-interest, carried out if necessary in an extra-market way, through the extraneous satisfaction of someone else’s self-interest, like a pay-off to the mob or the bureaucrat.

    Society thus becomes a zero-sum game, in short. The bribe is an active symbol of the spiritual ends of an unlawful ordering of human nature: fear, hostility, and greed.

    Do societies combine good and bad traits? Of course. Augustine described the political mixture of the kingdom of God, operating by His law to our proper spiritual ends, in the midst of the kingdom(s) of Man, operating by their tyrannical laws to their inhuman spiritual ends.

    We have missed the difference between these two kinds of societies because we have forgotten the spiritual ordering of natural law, familiar to both Augustine and Adam Smith, or conflated it with a reductive belief in the virtue of an ‘atomic,’ individual person, or else in the virtue of an ‘organic,’ tribal society, both conceived through the simplistic moral order of a ‘law of the jungle.’

    Yet, just like us, simple atoms are wont to join to form molecules, or productive social relationships, in which they can have effects beyond their own powers, and no social organism can survive without the ongoing, often unseen contributions of its component molecules and their participant atoms. Decaying social bodies and free radical persons share the same deadly fate.

    Merry Christmas to all!

    Charles

  • http://orientem.blogspot.com/ The Western Confucian

    Dear Dr. Schmiesing,

    Your article is being vigorously discussed at my blog:

    http://orientem.blogspot.com/2008/12/free-market-economics-at-christmas.html

    I was wondering if you might like to join in.

    Yours,
    Joshua Snyder