This is “Egoism: Just Me”, section 3.4 from the book Business Ethics (v. 1.0). For details on it (including licensing), click here.

For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. You may also download a PDF copy of this book (20 MB) or just this chapter (587 KB), suitable for printing or most e-readers, or a .zip file containing this book's HTML files (for use in a web browser offline).

Has this book helped you? Consider passing it on:
Creative Commons supports free culture from music to education. Their licenses helped make this book available to you.
DonorsChoose.org helps people like you help teachers fund their classroom projects, from art supplies to books to calculators.

3.4 Egoism: Just Me

Learning Objectives

  1. Define ethical egoism.
  2. Show how egoism works in and with business.
  3. Consider advantages and drawbacks of egoism.

Ethical Egoism

Ethical egoismThe belief that an action is morally right if the action’s consequences are more beneficial than unfavorable for the person who acts.: whatever action serves my self-interest is also the morally right action. What’s good for me in the sense that it gives me pleasure and happiness is also good in the sense that it’s the morally right thing to do.

Ethical egoism mirrors altruism: If I’m an altruist, I believe that actions ought to heighten the happiness of others in the world, and what happens to me is irrelevant. If I’m an egoist, I believe that actions ought to heighten my happiness, and what happens to others is irrelevant.

Could someone like Blake Mycoskie—someone widely recognized as an altruistic, social-cause hero—actually be an egoist? Yes. Consider things this way. Here’s a young guy and he’s out looking for money, celebrity, good parties, and a jaw-dropping girlfriend. It wouldn’t be the first time there was a guy like that.

Put yourself in his shoes and imagine you’re an ethical egoist: whatever’s good for you is good. Your situation is pretty clear, your moral responsibility lists what you should be trying to get, and the only question is how can I get it all?

That’s a tall order. Becoming a rock star would probably work, but there are a lot of people already out there going for it that way. The same goes for becoming a famous actor. Sports are another possibility; Mycoskie, in fact, made a run at pro tennis as a younger man, but like most who try, he couldn’t break into the upper echelon. So there are paths that may work, but they’re hard ones, it’s a real fight for every step forward.

If you’re smart—and Mycoskie obviously is—then you might look for a way to get what you want that doesn’t force you to compete so brutally with so many others. Even better, maybe you’ll look for a way that doesn’t present any competition at all, a brand new path to the wish list. The idea of a celebrity-driven shoe company that makes a profit but that also makes its founder a star in the eyes of the Hollywood stars is a pretty good strategy.

Obviously, no one can look deep into Mycoskie’s mind and determine exactly what drove him to found his enterprise. He may be an altruist or an egoist or something else, but what’s important is to outline how egoism can actually work in the world. It can work—though of course it doesn’t work this way every time—just like TOMS Shoes.

Egoism and Selfishness

When we hear the word egoist, an ugly profile typically comes to mind: self-centered, untrustworthy, pitiless, and callous with respect to others. Some egoists really are like that, but they don’t have to be that way. If you’re out to maximize your own happiness in the world, you might find that helping others is the shortest and fastest path to what you want. This is a very important point. Egoists aren’t against other people, they’re for themselves, and if helping others works for them, that’s what they’ll do. The case of TOMS Shoes fits right here. The company improves the lives of many; it raises the level of happiness in the world. And because it does that, the organization has had tremendous success, and because of that success, the Blake Mycoskie we’re imagining as an egoist is getting what he wants: money, great parties, and everyone loving him. In short, sometimes the best way to one’s own happiness is by helping others be happier.

That’s not always the way it works. Bernie Madoff destroyed families, stole people’s last dimes, and lived the high life all the way through. For an ethical egoist, the only blemish on his record is that he got caught.

Madoff did get caught, though, and this too needs to be factored into any consideration of egoists and how they relate to others. Just as egoists may help others because that serves their own interests, so too they may obey social customs and laws. It’s only important to note that they obey not out of deference to others or because it’s the morally right thing to do; they play by the rules because it’s the smart thing to do. They don’t want to end up rotting in jail.

A useful contrast can be drawn in this context between egoism and selfishness. Where egoism means putting your welfare above others’, selfishness is the refusal to see beyond yourself. Selfishness is the inability (or unwillingness) to recognize that there are others sharing the world, so it’s the selfish person, finally, who’s callous and insensitive to the wants and needs of others. For egoists, on the other hand, because working with others cooperatively can be an excellent way to satisfy their own desires, they may not be at all selfish; they may be just the opposite.

Enlightened Egoism, Cause Egoism, and the Invisible Hand

Enlightened egoismThe belief that benefitting others—acting to increase their happiness—can serve the egoist’s self-interest just as much as the egoist’s acts directly in favor of him or herself. is the conviction that benefitting others—acting to increase their happiness—can serve the egoist’s self-interest just as much as the egoist’s acts directly in favor of him or herself. As opposed to altruism, which claims that it’s our ethical responsibility to serve others, the enlightened egoist’s generosity is a rational strategy, not a moral imperative. We don’t help others because we ought to: we help them because it can make sense when, ultimately, we only want to help ourselves.

One simple and generic manifestation of enlightened egoism is a social contractAn agreement made between people to act in certain ways not because the acts are themselves good or bad, but because the rules for action are mutually beneficial.. For example, I agree not to steal from you as long as you agree not to steal from me. It’s not that I don’t take your things because I believe stealing is morally wrong; I leave you alone because it’s a good way to get you to leave me alone. On a less dramatic level, all of us form mini social contracts all the time. Just think of leading a group of people through one of those building exits that makes you cross two distinct banks of doors. If you’re first out, you’ll hold the door for those coming after, but then expect someone to hold the next door for you. Sure, some people hold the door because it’s good manners or something like that, but for most of us, if no one else ever held a door open for us, pretty soon we’d stop doing them the favor. It’s a trivial thing, of course, but in the real world people generally hold doors open for others because they’ve agreed to a social contract: everyone else does it for me; I’ll do it for them. That’s enlightened egoism, and it frequently works pretty well.

TOMS Shoes can be understood as a more sophisticated version of the same mentality. It’s hard to discern exactly what the contract would look like if someone tried to write it down, but it’s not hard to see the larger notion of enlightened egoism. Shoes are donated to others not because of a moral obligation but because serving the interests of others helps Blake Mycoskie serve his own. As long as shoe buyers keep holding up their end of the bargain by buying his product, Mycoskie will continue to help them be generous and feel good about themselves by donating pairs to people who need them.

Cause egoismGiving the false appearance of being concerned with the welfare of others in order to advance one’s own interests. is similar to, but also distinct from, enlightened egoism. Enlightened egoism works from the idea that helping others is a good way of helping myself. Cause egoism works from the idea that giving the appearance of helping others is a promising way to advance my own interests in business. As opposed to the enlightened egoist who will admit that he is out for himself but happy to benefit others along the way, the cause egoist claims to be mainly or only interested in benefiting others and then leverages that good publicity to help himself. Stated slightly differently, enlightened egoists respect others while pursuing their own interests, while cause egoists just fake it.

Adam Smith (1723–90) is known for making a connected point on the level of broad economic trade and capitalism. In the end, it usually doesn’t matter whether people actually care about the well-being of others, Smith maintains, because there exists an invisible handIn business ethics, the force of marketplace competition that encourages or even requires individuals who want to make money to make the lives of others better in the process. at work in the marketplace. It leads individuals who are trying to get rich to enrich their society as well, and that enrichment happens regardless of whether serving the general welfare was part of the original plan. According to Smith, the person in business generally

intends only his own gain, but is led by an invisible hand to promote an end which was no part of the original intention. By pursuing his own interest he frequently promotes that of the society, and does so more effectively than when he directly intends to promote it.Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: Strahan and Cadell, 1776), bk. 4, chap. 2.

What’s the invisible hand? It’s the force of marketplace competition, which encourages or even requires individuals who want to make money to make the lives of others better in the process.

The invisible hand is a central point defenders of egoism in business often make when talking about the virtues of a me-first ethics. Egoism is good for me, but it frequently ends up being good for everyone else, too. If that’s right, then even those who believe the utilitarian ideal of the general welfare should guide business decisions may be forced to concede that we should all just become egoists.

Here’s a quick example. If you open a little takeout pizza shack near campus and your idea is to clear the maximum amount of money possible to pay your tuition, what kind of business are you going to run? Does it make sense to take a customer’s twelve dollars and then hand over an oily pie with cheap plastic cheese and only three pepperonis? No, in the name of pursuing your own happiness, you’re going to try to charge a bit less than Domino’s and give your customers something slightly better—maybe you’ll spread richer cheese, or toss on a few extra pepperonis. Regardless, you’re not doing this for the reason an altruist would; you’re not doing it because you sense an ethical obligation to make others’ lives better. As an egoist, you don’t care whether your customers are happier or not. But if you want your business to grow, you better care. And because you’re ethically required to help your business grow in order to make tuition money and so make yourself happier, you’re going to end up improving the pizza-eating experience at your school. Better food, less money. Everyone wins. We’re not talking Mother Teresa here, but if ethical goodness is defined as more happiness for more people, then the pizza place is ethically good. Further, anybody who wants to start up a successful pizza restaurant is, very likely, going to end up doing good. If you don’t, if you can’t offer some advantage, then no one’s going to buy your slices.

Going beyond the quality-of-life benefits of businesses in society, Smith leaned toward a second claim that’s far more controversial. He wrote that the entrepreneur trying to do well actually promotes society’s well-being more effectively than when directly intending to promote it. This is startling. In essence, it’s the claim that for the most dedicated altruist the most effective strategy for life in business is…to act like an egoist. Within the economic world at least, the best way for someone who cares only about the well-being of others to implement that conviction is to go out and run a successful profit-making enterprise.

Clearly, this is a very powerful argument for defenders of ethical egoism. If it’s true that egoists beat altruists at their own game (increasing the happiness of everyone else), then egoism wins the debate by default; we should all become egoists. Unfortunately, it’s impossible to prove this claim one way or the other. One thing is clear, however: Smith’s implicit criticism of do-gooders can be illustrated. Sometimes individuals who decide to act for the good of others (instead of seeking profit for themselves) really do end up making the world a worse place. Dr. Loretta Napoleoni has shown how attempts by Bono of U2 to help the destitute in Africa have actually brought them more misery.Can Tran, “Celebrities Raising Funds for Africa End Up Making Things ‘Worse,’” Ground Report, May 14, 2008, accessed May 15, 2011, http://www.groundreport.com/World/Celebrities-Raising-Funds-For-Africa-End-Up-Making/2861070. Bono threw a benefit concert and dedicated the proceeds to Africa’s most needy. The intention was good, but the plan wasn’t thought all the way through and the money ended up getting diverted to warlords who used it to buy guns and bullets.

Still, the fact that some altruistic endeavors actually make things worse doesn’t mean they’re all doomed. Just as surely as some fail, others succeed.

The same mixed success can be attributed to businesses acting only for their own welfare, only for profit. If it’s true that the pizza sellers help improve campus life, what about the entrepreneurial honor student who volunteers to write your term paper for a price? It’s hard to see how a pay-for-grades scheme benefits students in general, even though the writer may make a tidy profit, and that one student who paid for the work may come out pretty well.

The invisible hand is the belief that businesses out in the world trying to do well for themselves tend to do good for others too. It may even be that they do more good than generous altruists. It’s hard to know for sure, but it can be concluded that there’s a distance between ethical egoism in reality and the image of the egoist as a ruthless destroyer of broad social happiness.

Some Rules of Egoism

Egoism, like altruism, is a consequentialist ethics: the ends justify the means. If an egoist were at the helm of TOMS Shoes and he cared only about meeting beautiful people and making huge money, he’d have no scruples about lying all day long. There’d be no problem with smiling and insisting that the reason TOMS Shoes exists is to generate charitable shoe donations to the poor. All that matters for the egoist is that the lie works, that it serves the goal of making TOMS as attractive and profitable as possible. If it does, then deviating from the truth becomes the ethically recommendable route to follow.

Personal egoismPracticing an ethics of egoism without regard for what others are doing or should do. versus impersonal egoismThe belief that everyone should practice ethical of egoism. distinguishes these two views: the personal egoist in the business world does whatever’s necessary to maximize his or her own happiness. What others do, however, is considered their business. The impersonal egoist believes everyone should get up in the morning and do what’s best for themselves and without concern for the welfare of others.

An impersonal egoist may find comfort in the invisible hand argument that the best way for me to do right with respect to society in general is to get rich. Of course it’s true that there’s something crude in shameless moneygrubbing, but when you look at things with rational eyes, it is hard to avoid noticing that the kinds of advances that make lives better—cars affordably produced on assembly lines; drugs from Lipitor to ChapStick; cell phones; spill-proof pens; whatever—often trace back to someone saying, “I want to make some money for myself.”

Rational egoismSubscribing to ethical egoism because it’s the most reasonable of the ethical theories, the one a perfectly rational person would choose. versus psychological egoismThe belief that we’re all necessarily egoists; it’s an inescapable part of what it means to be human. distinguishes two reasons for being an ethical egoist. The rational version stands on the idea that egoism makes sense. In the world as it is, and given a choice between the many ethical orientations available, egoism is the most reasonable. The psychological egoist believes that, for each of us, putting our own interests in front of everyone else isn’t a choice; it’s a reality. We’re made that way. Maybe it’s something written into our genes or it’s part of the way our minds are wired, but regardless, according to the psychological egoist, we all care about ourselves before anyone else and at their expense if necessary.

Why would I rationally choose to be an egoist? Maybe because I figure that if I don’t look out for myself, no one will. Or maybe I think almost everyone else is that way, too, so I better play along or I’m going to get played. (The Mexicans have a pithy phrase of common wisdom for this, “O te chingas, o te chingan,” which means “either you screw everyone else, or they’ll screw you.”) Maybe I believe that doing well for myself helps me do good for others too. The list could be drawn out, but the point is that there are numerous reasons why an intelligent person may accept ethical egoism as the way to go.

As for those who subscribe to the theory of psychological egoism, obviously there’s no end of examples in business and history to support the idea that no matter how much we may want things to be otherwise, the plain truth is we’re made to look out for number one. On the other hand, one problem for psychological egoists is that there do seem to be examples of people doing things that are irreconcilable with the idea that we’re all only trying to make ourselves happier:

  • Parents sacrificing for children. Any mom or dad who works overtime at some grinding job for cash to pay their children’s college tuition seems to be breaking the me-first rule. Here, the psychological egoist responds that, when you really think about it, there may be something there for the parents after all: it could be the pride in telling friends that their children are getting their degrees.
  • Mother Teresa or similar religious-based advocates for the needy. Anyone spending their time and energy making things better for others, while living painfully modestly, seems like a good candidate to break the rule of psychological egoism. Here, the psychological egoist responds that perhaps they see a different reward for themselves than earthly pleasures. They may believe, for example, that their suffering on this earth will be more than compensated by paradise in heaven.

The Four Relations between Egoism and Business

Structurally, there are four possible relations between ethical egoism and business life:

  1. You can have egoists in egoist organizations. This is mercenary capitalism. Individuals do whatever work is required so long as it benefits them to the maximum. Naturally, this kind of person might find a good home at a company entirely dedicated to maximizing its own health and success, which can mean one looking to maximize profits without other considerations. A good example is executives at the Countrywide mortgage firm. They OK’ed thousands of mortgages to clients who had no way to repay the money. Then they bundled and sold these mortgages to banks and other financial institutions, making a quick profit. When the loans later collapsed, those institutions fell into bankruptcy. The Countrywide executives quickly formed a new company to buy those same loans back at pennies on the dollar, thus once again turning millions in profits.Eric Lipton, “Ex-Leaders of Countrywide Profit from Bad Loans,” New York Times, March 3, 2009, accessed May 15, 2011, http://www.nytimes.com/2009/03/04/business/04penny.html.
  2. You can have egoists in nonegoist organizations. Possibly, the CEO of the College Board fits into this category. His salary of just under a million dollars annually sounds pretty good, especially when you consider that he gets it working for a nonprofit company that exists to help high school students find the college best fitted to them. It’s also possible that Blake Mycoskie of TOMS Shoes fits this profile: he lives an extremely enviable life in the middle of a company set up to help people who almost no one envies.
  3. You can have nonegoists in egoist organizations. Somewhere in the Countrywide mortgage company we could surely find someone who purchased shoes from TOMS because they wanted to participate in the project of helping the rural poor in Argentina.
  4. You can have nonegoists in nonegoist organizations. Think of the red kettle bell ringers popping up outside malls around the holiday season.

Advocating and Challenging Ethical Egoism

The arguments for an egoistic ethics include the following:

  • Clarity and simplicity. Everybody understands what it means to look out for themselves first.
  • Practicality. Many ethical theories claim to protect our individual interests, but each of us knows ourselves and our own interests best. So doesn’t it make sense that we as individuals take the lead? Further, with respect to creating happiness for ourselves, there’s no one closer to the action than us. So, again, doesn’t it make sense that each of us should be assigned that responsibility?
  • Sincerity. For those subscribing to psychological egoism, there’s a certain amount of honesty in this ethics not found in others. If our real motive beneath everything else is to provide for our own happiness first, then shouldn’t we just recognize and say that? It’s better to be sincere and admit that the reason we don’t steal is so that others don’t steal from us instead of inventing some other explanations which sound nice but are ultimately bogus.
  • Unintended consequences. In the business world, the concept of the invisible hand allows egoists to claim that their actions end up actually helping others and may help them more than direct charity or similar altruistic actions.
  • Finally, there’s a broad argument in favor of egoism that concerns dignity. If you’re out in the world being altruistic, it’s natural to assume that those benefiting from your generosity will be grateful. Sometimes they’re not, though. Sometimes the people we try to help repay us with spite and resentment. They do because there’s something condescending about helping others; there’s a message wrapped up in the aid that those who receive it are incapable of taking care of themselves and need someone superior to look out for them. This is especially palpable in the case of panhandlers. If you drop a dollar into their hat, it’s hard to not also send along the accusation that their existence is base and shameful (you refuse to look them in the eye; you drop the money and hurry away). To the extent that’s right, an egoism that expects people to look out for themselves and spurns charity may actually be the best way to demonstrate respect for others and to acknowledge their dignity.

Arguments against ethical egoism include the following:

  • Egoism isn’t ethics. The reason we have ethics is because there are so many people in the world and in business who care only about themselves. The entire idea of ethics, the reasoning goes, is to set up some rules for acting that rescue us from a cruel reality where everyone’s just looking out for number one.
  • Egoism ignores blatant wrongs. Stealing candy from a baby—or running a company selling crappy baby food—strikes most of us as unacceptable, but the rules of egoism dictate that those are recommendable actions as long as you can be assured that they’ll serve your interests.
  • Psychological egoism is not true. The idea that we have no choice but to pursue our own welfare before anything else is demonstrated to be false millions of times every day; it’s wrong every time someone makes an anonymous contribution to a cause or goes out of their way to help another without expecting anything in return.

Key Takeaways

  • Egoism defines ethically good as any act that raises the actor’s overall happiness (or decreases unhappiness) without counting anyone else’s increased or diminished happiness.
  • Egoism does not mean ignoring the existence and welfare of others, though they are not necessarily advocated either.
  • Though egoists act in the name of their own happiness, others may benefit.
  • Egoism intersects with the business world in various ways.

Review Questions

  1. What’s the difference between egoism and selfishness?
  2. In what situation would an egoist decide that a lie is morally wrong?
  3. In the real world, is there any way to distinguish an enlightened egoist from a cause egoist?
  4. What are some reasons someone may become a rational egoist?
  5. What is the invisible hand?
  6. If you were starting a small business, would you prefer that your partner is a utilitarian, an altruist, or an egoist? Why?