Market competition is not of course sufficient. As the Compendium goes on to say, market competition is a means rather than an end in itself.[ix] Nor does the pursuit of self-interest in the economy always align individual well-being with the common good. Businesses, trade unions, and other groups have not proved shy about seeking to enlist state power to pursue their self-interest. Adam Smith himself emphasized the propensity of many businesses to try to rig the system in their favor. “People of the same trade,” Smith wrote, “seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”[x] In such cases, these businesses have ceased to be economically entrepreneurial. Instead they turn out to be adept political entrepreneurs: experts at gaming the system rather than meeting consumer needs.
The injury done to the common good in these instances is considerable. This includes the basic injustice of governments according privileges to particular industries. In economic terms, it reduces the incentives for businesses to be economically creative and competitive, while increasing their incentives to curry favor with politicians and government officials. Certainly a type of “harmony,” in the sense of diminishing competitive turmoil, is temporarily established. But the long-term damage to many of the pre-conditions of human flourishing is difficult to underestimate. Note, however, that the problem is not the pursuit of self-interest per se. Rather it is the confluence of some people’s self-interest with state-power.
Excerpted from Tea Party Catholic, by Samuel Gregg (Crossroad, Sept. 1, 2013).
[i] Smith, Wealth of Nations, I.ii.2.
[ii] Francis, “Palm Sunday Homily,” 24 March 2013, no. 3.
[iii] See Bernard Mandeville, The Fable of the Bees: or, Private Vices, Public Benefits(1704/1715).
[iv] See James R. Otteson, Adam Smith’s Marketplace of Life (Cambridge: CUP, 2002).
[v] SS no.37.
[vi] CV no.78.
[vii] CA no.25.
[viii] Compendium of the Social Doctrine of the Church (2004), no.347.
[ix] See, for example, Compendium, no.348.
[x] The Glasgow Edition of the Works and Correspondence of Adam Smith, vol. II, An Inquiry into the Nature and Causes of The Wealth of Nations, R.H. Campbell and A.S. Skinner (gen. eds.), (Indianapolis, IL: Liberty Fund, 1776/1981), I. ii. 2.