Key Concepts

Self Interest

Many people interpret “self-interest” to mean greed, only thinking of yourself. That’s not the case. Adam Smith didn’t advocate greed, as his Theory of Moral Sentiments attests. Self-interest, however, is a fact of human nature. We are all inherently inclined to worry more about our own welfare than that of others. The businessperson who runs a successful operation (say a grocery store) is concerned about providing for himself and his family. However, in order to do so, he must also worry about his customer’s desires and wants. He must serve them to meet his own needs. So even if he’s behaving in a manner that serves his own self-interests, society benefits as well. (Society has products to buy and their needs are met as well.) If he fails to meet his customers’ needs, say because he is too “greedy” and raises his prices too high...they will stop buying from him, and thus his own needs won’t be met.