Author
Faculty Member, Research Center affiliated with the Islamic Consultative Assembly, Tehran, Iran.
Abstract
Background and Significance of the Study: The debate on the relationship between self-interest and public good has been a longstanding concern in the history of economics and social sciences. From the mercantilist era to modern economists, a pendulum-like oscillation has persisted between two dominant perspectives: those who argue that pursuing self-interest naturally leads to public good (e.g., Adam Smith and proponents of laissez-faire) and those who emphasize the conflict between the two, advocating state intervention to regulate this relationship (e.g., John Stuart Mill, Arthur Pigou, and John Maynard Keynes). This pendulum movement reflects a lack of consensus in the field, and contemporary economic and social crises—such as the 2008 financial crisis—demonstrate that previous responses to this question have been inadequate. Thus, this study revisits the issue by introducing a novel perspective, particularly drawing on the thought of Allama Tabatabai: (Muhammad Husayn Tabataba'i was an Iranian scholar, theorist, philosopher and one of the most prominent thinkers of modern Shia Islam.)
Literature Review
1. Early Perspectives
* Mercantilists: They believed that freely pursued self-interest conflicts with public interest, necessitating extensive state intervention. This view was rooted in Greek and Scholastic thought, which regarded self-interest as potentially destructive.
* Physiocrats: Introducing the concept of "natural law," the Physiocrats opposed mercantilism. Though often associated with laissez-faire, they advocated state intervention in agriculture, which they considered the only productive sector.
* Adam Smith: Smith legitimized the pursuit of self-interest in economics through the "invisible hand," arguing that such behavior unintentionally promotes public good. His innovation lay not in emphasizing self-interest but in reconciling it with public good without requiring conscious intent.
* Liberalism: From the 17th to 19th centuries, liberalism emphasized individual freedom in pursuing self-interest, asserting that markets, through competition and equal access, could maximize societal welfare, leading to the idea of minimal state intervention (laissez-faire).
2. Critical Perspectives
* John Stuart Mill: Adopting a utilitarian approach, Mill challenged the universality of laissez-faire, identifying three scenarios where self-interest does not align with public good: spillover effects, individuals’ inability to discern their true interests, and information asymmetry (e.g., in labor-employer relations).
* Henry Sidgwick: He also highlighted the divergence between private and public interests, advocating state intervention in specific cases.
* Alfred Marshall: Analyzing varying returns in industries, Marshall proposed protective policies for increasing-return industries and restrictive measures for decreasing-return ones.
* Arthur Pigou: Pigou emphasized "market failure," presenting cases where self-interest and public good diverge. Unlike his predecessors, he dismissed skepticism toward government, recommending state intervention to address inefficiencies.
* John Maynard Keynes: In The End of Laissez-Faire, Keynes rejected natural liberty as the basis of economic behavior, confining it to philosophical and political domains, and attributed the assumption of harmony between self-interest and public good to economists’ oversimplification.
3. Contemporary Perspectives
* Ronald Coase: Emphasizing property rights and negligible transaction costs, he argued that private actors could manage externalities without state intervention.
* Public Choice Theory (Buchanan & Tullock): Assuming self-interested behavior in public institutions, this school equated government inefficiency with market failure, rejecting state intervention as a definitive solution.
* Behavioral Economics (Kahneman & Thaler): Challenging the rational-agent assumption, this field demonstrated that individuals do not always act selfishly, as social and ethical considerations influence behavior.
* Neuroeconomics: Examining neural and emotional processes, it linked the complex relationship between self-interest and public good to the nature of choices (short-term vs. long-term).
Theoretical Framework: This study analyzed the issue based on three principles derived from Allama Tabatabai’s thought:
1. The Principle of Need: Humans are inherently needy, with needs evolving from traditional (food, clothing, shelter) to modern (digital communication, advanced healthcare, innovative payment systems). These needs necessitate social interaction, as individuals cannot fulfill them alone.
2. The Principle of Mutual Employment: Tabatabai argues that fulfilling needs requires "mutual employment," where individuals engage others to meet their needs while serving others in return. This principle underpins social formation, though unregulated cooperation may lead to conflict and exploitation.
3. The Principle of Conflict in Resource Utilization: Human efforts to fulfill needs through nature and society inevitably entail conflicts due to resource scarcity and unlimited desires, manifesting in disputes ranging from minor (e.g., land ownership) to major (e.g., wars over oil).
Analysis and Alternative Perspective: Critiquing two strategic errors in traditional approaches, this study proposed an alternative view:
1. Error of Universal Generalization: Many thinkers have sought a universal relationship between self-interest and public good, overlooking contextual complexities. Even limited exceptions (e.g., Mill’s cases) fail to rectify this overgeneralization.
2. Error of Imprecise Classification: Conventional economic categorization of goods (based on rivalry and excludability) into private, public, common-pool, and club goods ignores substantive differences. For instance, can fishing lakes and oil reserves be managed similarly?
The alternative perspective, inspired by Tabatabai, posits that the relationship between self-interest and public good is attribute-dependent, requiring case-by-case analysis based on three criteria:
* Key Actors: Who is involved in producing, distributing, or consuming the good?
* Scope of Self-Interest: To what extent can self-interest be pursued under full freedom?
* Extent of Impact: How far do self-interested actions affect others or society?
This analysis suggests that resource management mechanisms should operate along a fuzzy spectrum (from complete freedom to maximal state intervention), tailored to each good’s specific attributes.
Conclusion: The alternative approach, rooted in Tabatabai’s principles of need, mutual employment, and conflict, advocates a case-specific examination of the self-interest–public good relationship. This challenges traditional generalizations and conventional goods classifications. The policy implication is designing resource allocation mechanisms based on each sector’s unique nature—from market freedom for certain goods to state regulation for sensitive resources—thereby reducing conflicts and fostering equitable public good realization.
JEL classification: B13, B30, D70, P51, Z13.
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