Right Is Smart

 

What if “might makes right” has it backwards, and right is simply smarter?

For those who regard ethical conduct as part of a life well lived, the argument that follows may be almost beside the point. If doing the right thing is already its own reason, there is little need to demonstrate a return on the investment.

There is no need, in any case, to turn virtue into another asset class. Returning a lost wallet does not reliably improve a retirement portfolio, and holding the elevator for a stranger is unlikely to produce a measurable return on capital. Plenty of decent acts cost something and give nothing tangible back. That is precisely why they retain moral meaning.

But there is another, much more familiar assumption worth examining: that selfishness is simply better business.

The idea is old enough to have become proverbial. If you want to get ahead, climb the stairs by stepping on heads. Be harder, take more, concede less, extract the maximum, and do not spend too much time worrying about who absorbs the cost. The world may disapprove, but the balance sheet will understand.

There is an obvious truth buried in that picture. Ruthlessness can be profitable. Exploitation can produce margins. Monopoly can be lucrative. Paying less and charging more can improve a quarter very quickly.

But profitable behavior comes in many forms. Some gains come from extraction. Others come from cooperation, trust, specialization, reciprocity, and the creation of value that no participant could have produced alone.

The more interesting question is whether, among the full array of profitable strategies available to us, the collaborative ones may often be the more powerful.

If so, ruthlessness may not represent superior self-interest at all. It may simply be self-interest that never ventures beyond the shallows.

The Oldest Productivity Technology

Ant colonies and bee colonies can achieve levels of organization and productive specialization that would be impossible for their members acting independently. There is nothing moral about this. The ant is not practicing civic virtue. The bee has not read Adam Smith. The point is simpler: organized collaboration can produce capabilities that individual organisms do not possess.

Cooperation, then, predates economics by a very long time. Humans simply took the principle somewhere else. Our species did not become successful merely because individual humans became clever. We became unusually good at coordinating, teaching, sharing information, dividing tasks, exchanging, punishing free riders, and accumulating knowledge beyond the lifespan of any single person.

For most of our history, exclusion from that cooperative network was no minor inconvenience. Ostracism could be catastrophic. The person who took too much, betrayed too often, or became intolerable to live with did not merely acquire a bad reputation. He risked losing access to the productive system that kept him alive.

In that world, cooperation was not the moral alternative to self-interest; cooperation was how self-interest worked.

When the Feedback Gets Delayed

Accumulated wealth changes this ancient relationship in an important way because it delays the consequences of extraction. The hunter who alienates the band is likely to discover his mistake quickly; the billionaire, insulated by wealth from many of the people on whom that wealth ultimately depends, can spend decades mistaking the alienation of employees, suppliers, customers, competitors, communities, or even entire countries for evidence of business acumen.

The feedback has been delayed.

This is one of the peculiar effects of accumulation. It allows a person to convert yesterday’s cooperation into an asset that can temporarily reduce his dependence on today’s collaborators. And that can produce an illusion: the fortune appears to be an individual possession, and legally it is. But economically it remains a collaborative artifact.

Behind a large fortune stands a dense web of cooperation: people who work, people who buy, institutions that make contracts meaningful, generations of accumulated knowledge, and a level of trust and stability sufficient for exchange to keep functioning. Wealth may sit in one person’s name, but the conditions that make it possible are widely shared.

One can own the result individually, but one cannot individually manufacture all of its preconditions.

This is where Adam Smith remains remarkably powerful.

Smith’s great insight was not that greed is good. It was that self-interest can be structured so that serving one’s own interests requires serving somebody else’s. The baker does not need to love you; he only needs to value your business enough to bake bread you are willing to buy.

Competition turns self-interest into a form of cooperation. Specialization allows one person to become extraordinarily good at one thing while relying on thousands of strangers for nearly everything else. Exchange connects these islands of specialization, producing gains that cannot be reduced to the genius of any one participant but emerge from collaboration itself. The system is impressive precisely because it does not require sainthood. But the fact that cooperation can emerge from self-interest does not mean that every form of self-interest is equally capable of sustaining the conditions on which it depends.

Productivity’s Strange Success

This is where Karl Marx becomes more interesting than some of the theoretical machinery he built around his insights.

One does not need to accept every step of the labor theory of value to notice something peculiar: productivity means obtaining the same output with fewer inputs, more output from the same inputs, or, in the ideal case, more output from fewer inputs.

When labor is one of those inputs, increased labor productivity necessarily means that less labor is required per unit of output.

That is not a flaw. It is part of the system’s very logic.

A civilization capable of producing the same food, clothing, housing, transportation, information, and entertainment with fewer hours of compulsory human work has done something wonderful.

But now consider the position of the person whose primary commodity is his labor. The worker participates in improving processes: he learns shortcuts, corrects mistakes, develops methods, trains others, contributes knowledge, adopts better tools, and helps build the institutional memory that makes the organization more efficient.

Those improvements can remain long after the hours that created them are gone. His time cannot.

Human time is irrecoverable; productivity is scalable.

The worker therefore participates in a process whose success consists, at least partly, in reducing the future quantity of the very thing he has to sell. In this way, the worker helps produce the progressive obsolescence of his own product.

Historically, this tension has often been softened by economic expansion: productivity creates new industries, lowers costs, enlarges markets, and opens other forms of participation for displaced workers.

But there is an asymmetry here that deserves more attention: the pressure to economize inputs is built into the very definition of productivity; the mechanisms that give displaced humans some new economically valuable role are not built into anything. They are contingent.

There is no law requiring every labor-saving technology to generate an equivalent quantity of new labor demand. And there is certainly no automatic mechanism by which those who helped create a productive improvement acquire ownership of the productive capacity that replaces them.

Artificial intelligence makes the problem unusually visible: years of human language, judgment, creativity, and problem-solving can help build systems increasingly capable of reproducing portions of those same abilities with progressively less human time. In other words, finite human activity can be converted into productive capacity that can be reused and scaled far beyond the labor that created it.

Again, the problem is not automation. If productivity is the goal, automation is one of its most desirable milestones.

A System Can Succeed Against Itself

The contradiction is distinctly Hegelian: the system’s own success generates the conditions that destabilize it.

Capitalism rewards productivity; productivity economizes inputs; labor is an input. But labor income is also one of the principal mechanisms through which most people acquire claims on the fruits of capitalism. Push the two tendencies far enough and a productive triumph can begin producing a distributive problem.

Imagine an absurdly successful future economy. Twenty percent of humanity owns productive systems of staggering efficiency. Eighty percent has become economically marginal. The factories are magnificent. The algorithms are brilliant. Output per worker has reached levels our ancestors could not imagine. But there is only one annoying question:

Who buys the stuff?

There are only so many refrigerators one person, no matter how wealthy, can want; only so many cars, only so many houses. Even yachts eventually encounter a practical inconvenience: one human being cannot be on all of them at once, nor remain interested in acquiring them beyond a certain point.

This is where John Maynard Keynes enters the story: as people become wealthier, a smaller share of additional income tends to become additional consumption. The first thousand dollars above subsistence may quickly be absorbed by ordinary needs and pleasures. The billionth dollar does not create proportionately more consumption; it becomes saving, investment, another claim on future production.

There is nothing wrong with saving. Productive investment is one of the engines of growth. But investment itself ultimately needs a reason: someone must plausibly buy the future output.

At a certain point, extreme concentration can therefore create a peculiar economy in which total wealth continues rising while the circulation that gives that wealth economic meaning weakens.

Production ultimately requires customers with purchasing power, and the same is true even when wealth is held as financial assets rather than spent directly. A stock portfolio is a claim on future corporate earnings, and those earnings still depend on revenues generated by somebody else’s expenditure.

Your 401(k) needs somebody else’s paycheck.

This is why distribution cannot be treated merely as the moral argument that begins after production has done the serious work; distribution is inside the productive mechanism. A population must retain enough capacity and purchasing power to participate meaningfully in the system that produces wealth.

Starve enough of the productive organism and the problem is no longer merely unfairness; the organism begins to malfunction. If ninety percent of a bee colony’s resources accumulated somewhere that contributed little to keeping the colony functional, we would not congratulate the hive on its extraordinary wealth concentration. We would say its allocation system had become dysfunctional.

Human beings seem to have more difficulty recognizing the same possibility in ourselves.

The Global Mismatch

The problem becomes stranger at the global level.

Within a wealthy country, technological displacement can at least theoretically be offset through institutions that redistribute ownership, income, or opportunity, including arrangements we have not yet invented.

The same political community experiencing the productivity gain possesses institutions capable of distributing some of it. But globally, that connection largely disappears.

Productivity shocks cross borders far more easily than redistribution does. A worker in a poorer country can lose the value of what she sells because somebody became more productive thousands of kilometers away; a service once profitably outsourced may become cheaper to automate, and an economy that relied partly on inexpensive labor can discover that technology has made inexpensive labor itself less valuable. The productivity gain may occur in California while the displacement is felt in Manila, Buenos Aires, Lagos, or Dhaka. Markets transmit the gain globally, but the mechanisms that distribute its benefits remain largely national.

There is no global 401(k).

This creates a civilizational mismatch. Technology, capital, competition, supply chains, and displacement increasingly operate across borders, while the institutions that tax, insure, represent, and redistribute remain overwhelmingly national.

The same productivity that enriches one part of the system can depreciate the principal asset available to another: human labor. Yet this creates an unexpected argument from self-interest. A greedy view of poorer countries sees cheap labor; an even more ambitious one sees future collaborators and future consumers.

Raising productivity and purchasing power elsewhere is not necessarily money sacrificed to somebody else’s prosperity. It can enlarge the market in which one’s own assets will operate.

The person whose retirement depends on decades of corporate growth should perhaps want billions of currently poor people to become much richer, not merely as beneficiaries but as future customers. Collaboration expands the pie twice: first by making production more efficient, and then by expanding the number of people capable of participating in the exchange that makes further production worthwhile.

Killing the Golden Goose

None of this demonstrates that righteousness always pays. Sometimes doing the right thing genuinely costs something. At times, conversely, one person can profit handsomely by harming everyone else and die comfortably before the bill arrives.

Nor does any of this prove that markets naturally generate virtuous results. But the narrower proposition is more interesting: perhaps we have a tendency to overestimate what greed can actually accomplish.

The temptation seems evident: greed is extraordinarily good at answering one question:

How much can I capture?

But economic life requires another:

What arrangement causes the greatest amount of value to exist in the first place, and what must remain intact for that value to continue existing?

Those are not the same question. And once the distinction is made, the boundary between moral restraint and a more refined understanding of self-interest becomes less obvious.

Again and again, what appears as moral restraint admits a second interpretation: it may be an intuitive way of preserving the system on which self-interest depends, before the logic of doing so is fully understood.

A moral prohibition can preserve something whose usefulness has not yet become obvious to the individual making the decision, restraining exploitation or domination in ways that keep enough of the game intact for others to continue wanting to play it.

Perhaps this is one reason moral codes persist even when we cannot fully explain them. We are not very good at calculating complex systems across generations; we tend instead to optimize what is visible and discount consequences several steps removed.

Such prohibitions can sound like instructions to sacrifice self-interest and, perhaps, sometimes they are. But sometimes morality may be society remembering something that individual calculation has forgotten.

Righteousness may be collective intelligence operating at a horizon longer than any one person naturally sees.

And then there is another possibility, one that requires no moral premise at all.

As our understanding deepens, some of the apparent distance between collective benefit and self-interest may disappear. Not because morality is secretly capitalism in disguise, and not because goodness guarantees profit, but because much of what creates wealth in the first place is collaborative, and self-interest itself has reason to preserve the conditions that make collaboration fruitful.

Greed is shallow self-interest. Righteousness is collective intelligence. Imagination may be the bridge between them, because the failure to see beyond extraction is often not realism at all, but a failure to imagine arrangements capable of creating more value than extraction alone can capture.

For the very ambitious, there may be a silver lining: there is always one stair higher to climb. Sometimes that stair is not taking a larger share of what already exists, but imagining a way for more to exist in the first place.