Self-interest – What it is, definition and concept

Self-interest or personal interest, based on the postulates of Adam Smith, is the value we attach to something, which motivates us to carry out actions that pursue, at all times, personal benefit. That is to say, the own benefit.

Thus, it is convenient to know that in economics interest plays an essential role. And not precisely because we find it in many economic disciplines, but because it is what leads society to move, interact, consume, produce, among many other actions that try to satisfy an internal need.

Adam Smith, father of modern economics and capitalism, said that individuals, in pursuit of their own interest, would carry out actions that would bring greater economic prosperity. Since everyone cares about their own good, it makes more sense for Smith that there are more people who achieve well-being. In a way, this is what Smith means by the story of the “invisible hand.” For it is this invisible hand, self-interest, that makes the free market self-manage and self-correct.

However, it must be said that the theory shows us the existence of market failures, which put Smith’s theories to the test. But we must emphasize that, since we are talking about an eighteenth century economist, his knowledge and the development he contributed is highly admired.

Self-interest and the invisible hand

As we can see, self-interest is a highly relevant concept. As we have mentioned before, another is born from this, which we call the “invisible hand.”

If you don’t know what the invisible hand is, it should be noted that we are talking about a theory. This describes a metaphor that points to the market economy as a tool with the capacity to achieve maximum social well-being, while seeking self-interest.

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This theory was developed by the economist Adam Smith, but if you want to know more about this, click on the following button at the end of this article.

Returning to self-interest or personal interest, depending on what we want to call it, we talk about that interest that inspires Smith to develop this theory. Based on the statements of the Scotsman, the market can only be regulated and there is an “invisible hand”, when the free market is present. A free market in which the forces of supply and demand prevail, that is, the self-interest of each of the agents.

Self-interest and selfishness

Many are the thinkers who have discussed Smith’s theories. In this sense, those that say that the human being pursues his own interest, and there should not be a public interest.

According to these, Adam Smith is a selfish economist, because he only thinks about his own benefit and does not take into account certain aspects such as the starting point, inequality, as well as other market failures that, with intervention, must be corrected.

Today these theories continue to be questioned, at the same time that currents of thought are born, such as moral selfishness, which advocate defending Smith’s postulates, while we have the social democracy that advocates a more egalitarian society that pursues a public interest.

Therefore, we are talking about a discussion that does not seem to have an early end. Although, while it is true, orthodox economists defend market economies, since they consider them, to date and given the empirical evidence, the best economic system.

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