Human Nature at Work in Free Markets

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When they framed the United States Constitution, the Founders were not simply politicians attempting to maintain their own temporary power. Being well-versed in history, philosophy, and the classics, they instead sought to create a system of government that would best suit man and his natural inclinations. The Founders concluded, as many other intellectuals had throughout history, that human nature is generally self-centered. This inborn ambition fueled a drive for greater wealth, status, and power throughout history much as it continues to do so today. As James Madison wrote in Federalist #51, “What is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary.”  Recognizing that attempting to use government to change the inherent inclinations of man would be futile and dangerous to liberty, the Founders instead proposed to establish a political system where individual ambitions could flourish naturally without producing catastrophic results for the nation as a whole. As Madison concluded, “Ambition must be made to counteract ambition.”

Splitting the government into three branches is one example of this theory in action. The Founders believed this to be the best way to protect the nation from a tyrant like Caesar. By setting the legislative, executive, and judicial branches against each other through a system of checks and balances like the presidential veto and congressional “power of the purse” the Founders hoped to create a constant state of tension within the government that would prevent one branch from dominating the others. Instead, the intuitive tendency of man to assert political dominance would act as a constant check against the natural ambitions of the other branches.

The Founders utilized their theory on the innate self-centeredness of human nature to create a workable political system that did not sacrifice its republican spirit of limited government. The same theory can be applied to economics in the defense of a free-market system. Humans are in fact self-centered when operating in the market. Buyers want to purchase the best goods at the lowest price just as sellers have their own interest in accumulating the largest possible amount of capital for themselves and their families. So how can a workable system be created to please both parties that are primarily self-interested? Ambition needs to counteract ambition. The Founders recognized that merely writing down a list of checks and balances would not last long in preventing one branch from overcoming the others. Instead, each one needed a compelling reason to uphold specific restrictions of power against its fellow branches. The ambition of one branch thus acts as a check against the ambition of the others. Just as the Founders understood that the presidential veto would be used selfishly to prevent a congressional measure from crippling executive power, buyers will work in their own self-interest and refuse to purchase overpriced apples from an excessively greedy farmer. However, both sides benefit when the customer’s ambition is properly balanced against that of the producer. Sellers will find the optimal price for their goods so they will make enough sales to gain a profit and satisfy their own monetary desires. Buyers will only purchase goods which meet their own standards for budget and quality. When the price and quality of a good is acceptable for both buyer and seller, a transaction is made, satisfying the wants of both parties. In the American political system, the executive, legislature, and judiciary prevent gridlock when they reach the optimal balance of power among themselves.

Considering that the U.S. Constitution is the outline of a national government, it is a relatively short document. Its authors recognized that changing times would bring new situations and problems, but human nature would never change. Thus, excessive regulations and bureaucracies designed to keep the government constantly running in top form were not included in the document and would in fact do more harm than good, as the government cannot change the inherent inclinations of man. Likewise, the free market allows the natural, selfish desires of man to be satiated in a productive setting where both buyers and sellers benefit. Our country’s leaders would do well to recognize that excessive regulation is not the most advantageous way to protect citizens in the market. Instead, basic laws should be passed and enforced that protect life and property from attack, and man’s natural ambition will take care of the rest.

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