5 - Self-Interest as a Moral Foundation

Summary

In Chapter 5, I address self-interest as a foundation for capitalism by discussing the development of the Chicago School and the life and writings of Ayn Rand. Neoclassical economists after Alfred Marshall continued the narrowing of their discipline begun by classical economists. Whereas Polanyi and Keynes emphasized responsibility and duty in their moral foundation based on humanism, neoclassical economists associated with the Chicago School eschewed all social and moral responsibility and made narrow self-interest their reigning behavioral assumption. I begin by discussing the continued narrowing of neoclassical economics in the twentieth century and the rise of self-interest as the defining principle in economics. I discuss how the assumption of self-interest gained momentum and eventually conquered the Chicago School of Economics. I then discuss Ayn Rand’s glorification of self-interest in her novels and her interaction with the political right in America. I show how Rand’s moral foundation for capitalism based on narrow self-interest (rational egoism) represented a natural extension of the straightjacket of self-interest out of Chicago. This sets up a discussion of self-interest as a moral foundation for capitalism based on the seminal writings of the Chicago School and Ayn Rand.