EspañolOn April 15, as part of a seminar organized by the consulting firm KPMG, the president of the Chilean pension fund administration AFP Habitat, José Antonio Guzmán, raised the issue of irregularities and bad financial practices in Chile over the last few years. They include scandals from investment funds such as Las Cascadas, La Polar, and Enersis, and Guzmán referred to them as “deplorable,” “harmful to the public trust,” and caused by the “uncontrollable greed” of certain businesses.
These were harsh, but not entirely undeserved, words from Guzmán, who considers these cases very damaging to the credibility and confidence of economic agents. He’s right; these ideas are fundamental to a free society.
Liberal credentials are being usurped, first by those who, while in favor of some economic freedoms, strike down initiatives for social and civil liberties; and second, by those who, in an equally sophistical manner, advocate for social freedoms, but expect the state to take ownership of the economy.
It is important to remember and be fully aware of who we are.
For critics of liberalism and many who identify with liberal ideas, liberal identity is reduced to homo economicus. Behind this image lies a flat, monolithic idea of the individual, whose prosaically distinctive feature is selfishness and self-interest. It is a reductive and partial vision resulting from, on the one hand, scientific approaches and the disproportionate role of the formal analysis models in the social sciences; and on the other, it is a superficial reading of classical liberal authors.
This mischaracterization plays into stereotypes skillfully used by critics of liberalism, as exemplified by Guzmán’s statements — although this recognition need not detract from his assertions on the importance of confidence and credibility as social values.
The truth is that to be liberal and to make use of liberty goes far beyond being a homo economicus. Being liberal is not restricted to the focus on objectives or a cost-benefit calculation guided exclusively by greater profit or rate of return. We are much more than that. In a truly liberal society, composed of free and autonomous individuals, there would be a variety of motives and reasons that transcend far beyond economics.
True liberals must learn to confront these stereotypes from the point of view of their own properly defined identity — precisely from the exercise of our autonomy and freedom. We must restore the wholeness and coherence of the philosophical arguments that make up our cultural heritage. To do this, it is always necessary to return to the source, the classics.
Being a liberal is a moral stance. “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it,” said Adam Smith in The Theory of Moral Sentiments.
What Smith does in Theory, written before The Wealth of Nations, is to supplement the reflections on freedom and rational egoism with a moral theory and ideas of “sympathy.” Sympathy is a sentiment, but a moral sentiment that ennobles and completes rational, self-interested individuals who act in pursuit of their idea of good and happiness, but do not lose the capacity to empathize. It allows one to see oneself from the position of an impartial observer, so as to — to paraphrase Smith — approve or disapprove of one’s own behavior once seen from the other’s point of view.
“As we have no immediate experience of what other men feel, we can form no idea of the manner in which they are affected, but by conceiving what we ourselves should feel in the like situation,” he continues.
That sentimental and moral capacity, a potential that characterizes all men, is what constitutes a truly solid platform for self-governance of people who come together through trust and reciprocity, within a framework where the state must ensure the protection of these conditions of trust that are the foundation and basis of social cooperation.
This is why The Theory of Moral Sentiments should not be considered as distinct or incompatible with The Wealth of Nations. Theory is undoubtedly a supplemental text, which must be read in conjunction with what is considered Smith’s main work. The invisible hand that almost prodigiously orders and harmonizes individual goals and projects produces a socially beneficial order only when individuals do not lose that capacity to empathize with the pain and joy of their neighbors.
The greedy practices of “those few” that Guzmán denounces shows that they lack that moral imagination required to put themselves in the position of the other, both to understand their suffering and to see themselves from their point of view; only then is it possible to undergo a genuine self-analysis.
A liberal should be willing to do this on a daily basis. In order to do so, it will require a healthy dose of courage and magnanimity.