Excerpt of the Day: Milton Friedman on “Self-Interest”

Hillsdale College’s July 2006 issue of Imprimis has a must-read retrospective interview with Nobel-winning economist and legend Milton Friedman. It is primarily about “Free to Choose,” his 1980 book and television series, that remains one of the most important treatments ever of the four-way intersection between economics, markets, politics, and freedom.

At the very end of the interview, Friedman had this to say to interviewer Larry Arnn, Hillsdale President, about “self-interest,” and in the process revealed how Arnn and so many others misunderstand the idea:

Larry Arnn: I have one more question for you. You describe a society in which people look after themselves because they know the most about themselves, and they will flourish if you let them. You, however, are a crusader for the rights of others. For example, you say in Free to Choose—and it’s a very powerful statement—a tiny minority is what matters. So is it one of the weaknesses of the free market that it requires certain extremely talented and disinterested people who can defend it?

Milton Friedman: No, that’s not right. The self-interest of the kind of people you just described is promoting public policy. That’s what they’re interested in doing. For example, what was my self-interest in economics? My self-interest to begin with was to understand the real mystery and puzzle that was the Great Depression. My self-interest was to try to understand why that happened, and that’s what I enjoyed doing—that was my self-interest. Out of that I grew to learn some things—to have some knowledge. Following that, my self-interest was to see that other people understood the same things and took appropriate action.

LA: Do you define self-interest as what the individual wants?

MF: Yes, self-interest is what the individual wants. Mother Teresa, to take one example, operated on a completely self-interested basis. Self-interest does not mean narrow self-interest. Self-interest does not mean monetary self-interest. Self-interest means pursuing those things that are valuable to you but which you can also persuade others to value. Such things very often go beyond immediate material interest.

LA: Does that mean self-interest is a synonym for self-sacrifice?

MF: If you want to see how pervasive this sort of self-interest is that I’m describing, look at the enormous amount of money contributed after Hurricane Katrina. That was a tremendous display of self-interest: The self-interest of people in that case was to help others. Self-interest, rightly understood, works for the benefit of society as a whole.

There’s quite a bit of difference between the “self-interest” that Friedman describes and the “selfishness” so many free-market believers are frequently accused of.

Friedman, who is almost 94, is sharper than almost everyone else is at 34.