The Hindu Business Line : Not-so-selfish, after all

Sometimes, if not always, you refrain from doing things on moral grounds. Philosophically speaking, you may be leading a good life. But you may not be adding economic value to the society! Why?

The reason is that philosophy and economics do not always complement each other.

A column in a recent issue of the Time magazine on the US President, Mr George Bush, brings this point to the fore.

The President is happy that Alberta, a province in Canada, has large oil deposits. This will provide the US economy access to oil. Mr Bush may not be concerned about the Canadian economy.

Yet, his actions may benefit Canada. How?

Mr Bush can well frame a law that restricts consumption of oil in the US.

Instead, he has chosen to provide enough oil supplies to satisfy the needs of his people. In a way, his action is self-centred, as he wants his people to enjoy the benefits that oil can provide.

Yet, he will be helping Canada. For, the US will have to pay Canada for the oil it buys.

This concept of doing well for society by doing good to oneself is not new.

Adam Smith mentions this in his classic The Wealth of the Nations. He called it the "invisible hand." You may engage in an action solely to benefit yourself. Yet, the presence of an "invisible hand" will direct that action to benefit the society.

This argument is called as the fundamental principle of welfare economics. To put it in economic parlance, the "invisible hand" transforms your self-interest into common good.

(The author is based in Ontario, Canada.)

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