coffee

In a free exchange both parties expect and can, in principle, benefit. Joe buys a coffee from Francis at the price of 60 cents. Joe only enters this transaction because he places on the coffee a value that is higher than the value he places on the 60 cents. Conversely, Francis enters the trade because he places on the 60 cents a value which is higher than the value he places on the coffee.

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This is the typical capitalist transaction and some authors have gone from here to conclude that capitalism is based on self-interest or egoism. Their enthusiasm for the growth potential of an economic system based on free, unhindered exchanges has led them often to generalize the benefits of egoism, seen as the pursuit of self-interest, to other spheres of life sometimes ending up either denying the existence of altruism or making altruism literally a sin. This has been a very serious mistake which in my view has contributed, more than anything else, to make the liberal ideal impopular, at least in the economic sphere.

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The important point to stress here is that all exchanges that take place between free human beings involve elements of both egoism and altruism. Even in the pure economic sphere - that of impersonal market transactions - some element of altruism is always present. In the above example, Joe would not be able to buy the coffee from Francis if he were not prepared to confer a benefit on Francis. Conversely, Francis would not be able to sell the coffee to Joe if he were not ready to offer a benefit to Joe.

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What distinguishes the different spheres of life is not that some are purely egoistic and others purely altruistic. This mistake becomes even more serious if we try to deny altruism altogether as some liberals authors do. What distinguishes them is the degree in which both egoism and altruism are involved. Thus in the exchanges that take place within Joe's family his regard for the interests of others, such as his wife and children, is higher than when he buys coffee from Francis in the marketplace. The same holds true for exchanges taking place within the sphere of religion and should, in principle, hold true within the sphere of government.