The Inevitability of Private Interests

Not all economic statists are blind to the obvious government failures. They do not all deny that many state interventions into the market don’t help the people at large. Some maintain a different misconception. Sophisticated leftists (and right-populists) will usually diagnose the problem to be those perennial culprits behind every inequity and social woe: the dreaded “private interests.”

“Private interests” corrupt public servants and turn them against the people. They buy off the officials at the Department of Agriculture, Food and Drug Administration and Environmental Protection Agency, bending the laws for their own private gain. They disrupt the regulation of savings and loans and make it scandalous. They lobby for corporate welfare and sham privatizations. Greedy and ubiquitous, these “interests” keep interrupting the state in its pursuit of the common good. If it weren’t for “private interests,” the central plan would work.

It is a mistake to ignore the nub of truth in these complaints. Historically, private interests have doubtless used their financial weight to point regulations in their desired direction, to obtain privileges and subsidies from the state, to disrupt government activity they dislike and encourage that which they favor.

More fundamentally, if it were not for private interests, central planning would indeed have an easier time and a better track record. But the self-interest of people keeps getting in the way. So this truth is not the misconception that economic collectivists hold; certainly, people have desires and goals that run at cross-purposes with the “common good.” In fact – and this is what the collectivists don’t see – private interests are inevitable, all human interests are private interests, and there is no such monolithic thing as “the common good.”

The case for this last assertion is easy to make. It is made even by those who resist its implications. When the collectivist laments that the private interest and public interest sometimes conflict, he concedes that there is no uniform public interest at all. Why would any private individual or group bother lobbying for laws or conducting business in any ways contrary to the common good? If it were truly common, all private interests would share in common an interest in sustaining it.

Every individual has private goals and aspirations. Even two life-long business partners or a man and wife married for half a century do not have the exact same needs and wants as their close companions at all times. There are ways to maximize the number of people whose private interests are best fulfilled. There are a million ways to act upon your private interests that help others around you and trespass on no one. There are goods and services that virtually all of us would welcome and encourage. But the “common good,” as it is usually meant, will always be a fantasy.

The moment anyone wants to game the system – an ineluctable urge, as the socialists insist – the commonality ceases to be. Only if everyone were built on the same assembly line and programmed the same way at the factory could the inevitability of private interests be thwarted.

Leftists often critique both the state capitalist and free market models of economic exchange, arguing that in either case some benefit at the expense of others. They say this will unavoidably happen because people are always out to rip off their customers, clients and employees to line their own pockets. They see selfishness everywhere, and yet assume a government driven by the “common good” could be right around the corner.

Here we see a fallacy borne by nearly all arguments for the state to temper private interests, to smooth out the rough edges of capitalism, to level the playing field, to stand guard over the public good against the predatory covetousness of the selfish. Private interests are everywhere. So how’s the state going to stop them? How, even, can it resist their influence?

Politicians, too, are private interests. So are bureaucrats, social engineers, public schoolteachers, and policemen. They are all individuals, regardless of their spruce uniforms or tax-funded pension packages. The political class itself benefits anytime the government expands, and yet it is rarely recognized as a vested interest in politics.

The same private interests willing to cheat the consumer and worker in business are also willing to enter politics, to fund campaigns, to run for office, to bribe officials, to exploit every advantage the state offers to the dishonest entrepreneur. Further entrenching the monopoly of violence that is the state into the economy only ups the ante of the game over political influence. The more the state can regulate private interests, the more private interests will take control of the state.

The larger the state is, the more private individuals and groups have an interest in keeping the racket going. As the government expands to the detriment or assistance of specific sectors of the economy, collusion is inevitable. Those with power will use it to help the businesses they favor for whatever reason, and those in business will seek to deflect harmful legislation and encourage desired legislation. The more government intervention in the economy, the more the state and business classes coalesce, the more private interests can socialize their costs and privatize the profits to themselves. Socialism merely guarantees unearned profits and unjust power to whoever controls the state. And the state will be controlled by someone.

At the extreme this is all fascism or communism really is: the state becomes the principal corporation in society, with a monopoly on customers and no competition. Employer and producer become one with judge, jury and executioner. In a more mixed economy, social-democratic state-capitalism displays a similar kind of ugliness, but in smaller doses. Big Business and the most powerful private interests will categorically be the ones in government’s favor. How could it be any another way? That the top regulators of drugs are former drug company CEOs, the top regulators of banking are fat cat bankers, and the top regulators of the presidential debates are heads of the two political parties should leave no one surprised. The promise that it could be different should leave no one fooled.

The serious question for economic policy is: Given the inevitability of private interests, how do we want these forces to interact with each other? The most ethical and practical answer is the free market, anchored in private property and voluntary exchange. Only in the free market are private actions rewarded for how much they serve the private interests of others, and dissuaded to the extent that they do nothing of value for anyone willing to give something in return. Only in the free market can even the most selfish wants of humans be directed toward activities benevolent or at least benign. Only in the free market is all charity charitable, all cooperation cooperative and all production productive. Not everyone visibly benefits from every transaction everywhere, but everyone is allowed to benefit from any peaceful exchange mutually agreed upon.

To the degree that men and women have been free to trade and share with each other (and free not to trade and share), civilization has advanced. We owe the blessings of modern technology and the rising standard of living to the voluntary networks of peaceful exchange all around us. The free market allows for explosive amounts of wealth production and enriches the working class like no other system. Just as important, it is the only system compatible with a voluntary society, rich and diverse in arts, literature, music, sports, entertainment, science, medical care, cuisine, spiritual discovery and all facets of culture. A free economy simply means that peaceful, productive interactions, and not coercive ones, prevail in human affairs.

There will always be at least some hucksters and crooks. People do need to guard against misrepresentation and fraud, and have avenues of redress. But the state only brings violence into the equation, drawing private interests from productive and mutually beneficial work and into the arena of fighting over the engine of power. No longer do they devote themselves to competing for customers; now they compete for state privilege. Voluntary human relationships of all sorts are imperfect, but the state’s violence invariably makes them all worse. The market, in contrast, gives us all a shot to pursue our health and happiness in freedom.

In response to two possible objections that I am contradicting myself, that I am condemning the unrealistic goals of collectivism while lying in wait for the eminently unlikely reality of a completely free market, and that I am describing the free market as just the sort of common good that I above claimed was impossible, I will only say, in response to the first objection, that the mere unlikelihood of a totally free market does not render it a utopian fantasy in the same vein as the impossible total state that successfully abolishes private interests and in their place elevates the “common good,” and, in response to the second, admit that the free market would probably not be to everyone’s material gain. Plenty of politicians, political capitalists, exploitative CEOs, Pentagon contractors, union bosses, lobbyists, and parasites of various stripes would likely do worse under a free market system, at least in the immediacy, in terms of the inflated profits and domination over others that they would lose. Whether in a free market they might more likely reform themselves and find salvation, it is not my place to guess.

October 18, 2005

Anthony Gregory [send him mail] is a writer and musician who lives in Berkeley, California. He is a research analyst at the Independent Institute. See his webpage for more articles and personal information.

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