Capitalism’s Invisible Hand Doesn’t Generate Public Good

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If you came into a windfall, would you be more enthusiastic about buying yourself something big or giving to charity? If honest, most of us would admit that buying ourselves something big would be the more motivating prospect. Direct benefit to ourselves is generally more motivating than distributed benefit to others.

Apply this to large institutions and you’re confronted with a fundamental feature of capitalism. In a competition between for-profit and non-profit campaigns, the for-profits have a motivational advantage. They’re buying themselves something big. Their campaigns reward directly. Wealthy individuals and corporations serving self-interest will generally prevail against non-profit campaigns in the public interest. A self-funding campaign beats a charity-funded campaign almost every time.

Libertarians recognize this. It's why they say that for-profits are so efficient. But efficient at what? Not promoting general welfare.

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