Rationality Consists in Selfishness is ‘Fake News’

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A rational person interacts with the world around himself or herself, not on basis of a whim or a wish, but on basis of some recognition of reality. A reality that is objective, that, unequivocally is non-subjective?

If, absent caring about satisfaction of needs and wants of others, there is not arrival at earning of money, clearly, every model of rational human behavior must embed caring for needs of others.

Suppose then that Mr. ABC cares about needs and wants of Mr. XYZ. While ABC cares about needs of XYZ, and seeks to meet those needs, simultaneously, ABC seeks to be selfish in context of interactions with XYZ.

Selfishness here implies, ABC seeks to arrogate to himself more than his fair share of the economic surplus that is generated in context of economic interactions that subsist between himself and XYZ. An illustration of selfishness is unwillingness to pass on cost savings facilitated by technology, in form of lower prices, to XYZ.

In a well functioning and efficient market, there will exist a Ms. HIG who recognizes she is able to undercut ABC’s prices, and yet arrive at a decent economic profit. Once HIG enters the market with a comparable quality product at a lower price, and attracts XYZ’s attention, rationality of XYZ implies a shift from ABC’s product to HIG’s product, an action that forces ABC to reduce prices, such that his prices match those of HIG.

Consider, however, implication of ABC’s actions. Let us assume that consequent on entry of HIG, ABC and HIG split the market evenly. Note that with XYZ now aware that ABC could have charged lower prices all along, ABC loses goodwill, meaning the assumption that ABC keeps half of the market is an overly optimistic assumption.

If ABC had charged the lowest price brought into play by HIG all along, HIG would not have opportunity for entry, and ABC would have kept the entire market to itself. It is straightforward that profits, which accrue from straddling of the entire market at a slightly lower price always will be greater than profits that accrue from 50% of the market at the same lower price. It is clear then, that, in hindsight, ABC’s selfishness turns out to be contradictory to rationality. In Mathematics, having thought things out, this contradiction implies that, right from the outset, ABC chooses not to act selfishly.

Well then, is Selfishness ever consistent with Rationality? The answer is a resounding No!!!, but yet with a caveat.

Whenever societies function on a power rubric, meaning ABC can, via political connections, keep HIG from entering the market, Selfishness can produce more beneficial outcomes than keeping of a fair share of economic surplus that is generated in context of economic interactions. We have then that any association of Selfishness with Rationality embeds advocacy of Power games, as opposed to Market Efficiency, for management of socioeconomic and political interactions within society.

If you do not desire to live in a society that trips on power games, you care about needs and wants of others, and seek to keep your fair share of economic surplus generated in context of economic interactions that subsist within society.

If you choose to function on power games, you validate a factional society within which George W. Bush attempts to pull everyone to the right; Barack Obama attempts to pull everyone to the left; and Donald Trump attempts once again to pull everyone to the right.

You know what happens to wealth of average people, that is, the Middle Class and Upper Middle Class when politicians play ‘yank towards my faction’ every four years? Wealth either stays stagnant, or diminishes, for every four years, only a different and relatively small segment of the society experiences true prosperity.

If you seek a society within which progressive prosperity is feasible for all at every point in time, you celebrate Rationality that functions in context of Well Functioning and Efficient Markets. Within this chosen context, Rationality always is contradictory to Selfishness.

Written by

Educator and Researcher, Believer in Spirituality, Life is serious business, but we all are pilgrims so I write about important stuff with empathy and ethos

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