Key Concepts
Self-Interest
is not the same thing as Selfishness.
Self-Interest is the basis of most Economic theories. Most economists assume that people will always seek what is in their best interest. That makes some people feel a certain way about economists. But Self-Interest is not the same thing as Selfishness, and it comes in varying levels of expansiveness.
Since the idea of Self-Interest is so foundational to economic thought - the way we understand it is pivotal to which school of Economics feels most natural to us. People with a narrow view of Self-Interest (or who believe that most people take a narrow view) may base their economic theories on the idea that people will only engage in productive work when it is necessary to their own survival. People with a more expansive view (or who believe that most people have a more expansive view) may base their economic theories on the idea that people have an innate drive to be productive and take care of others.
These two viewpoints lead to very different conclusions about the best way to organize society.
The Guineanomics framework can be applied to either viewpoint. It contains the possibility of people having a broader view of their own Self-Interest - but it doesn't require it. Guineanomics takes people as they are. And we've observed a lot of human behaviors that appear motivated by both narrow and expansive views on Self-Interest. We call these more expansive views "Self-Interest in Disguise".
What do you mean by "Self-Interest in Disguise"?
In its most essential form, Self-Interest is the drive to stay alive – to get the things necessary for being alive, and prevent the situations that would cause a state of not being alive. If you are a fan of Maslow’s hierarchy of needs, you would recognize this as the two base levels – physiological and safety.
But humans have other needs, too. Like guinea pigs, they are social animals. They need love, affection and belonging (Maslow’s third level). But putting aside Maslow for a moment - it's just not true that a human can make it on their own in this world (for very long). Human babies take a ridiculously long time to learn how to move themselves around with any sort of accuracy. And that's just the start of all the care a juvenile human needs before they can be let loose with any semblance of independence. At which point, they can live off the land (that they don't have because of how we construe property rights) or enter into a complex, interdependent society. And that complex, interdependent society relies on the well-being of others.
It is very Self-Interested to be concerned about how well your society functions, and what can help it function better. The need for social cohesion may be part of the reason why humans have internalized value systems and often seek a greater sense of meaning (Maslow’s top levels). Many humans feel distressed when they don't live up to their own ideas of what makes for a good person, or have a sense of purpose in their lives. Reducing these feelings of distress - but living out the idea of being "a good person" - is a very Self-Interested thing to do.
When you think about it – why would you ever do something that was not in your own Self-Interest? Even sacrificing your own safety and well-being for others, or for your belief system, can be easily understood as a more expansive understanding of your own Self-Interest - what we call "Self-Interest in Disguise".
Making a sacrifice is making a decision that something outside of your physical self is more important to you than your physical well-being. We commonly call these behaviors Selfless – but it’s equally valid to reconceptualize them as Self-Interest in Disguise. You’re not gong to sacrifice your life for something you don’t actually care about, or see as a greater good!
Is it semantics? A little bit. But if we undertake Economics as a serious scientific discipline, we need to be precise with our terms. In Guineanomics – we take all goal-directed behavior to be Self-Interested, and draw a firm distinction between Self-Interest and Selfishness.
What about when people make stupid choices? Well – stupid according to who? People pursue their own self-interest as they see it - not how other people see it. Sometimes they are mistaken and acting on bad information. Sometimes they have value systems other people disagree with. Sometimes they have lived experiences that drive them to do things that are incomprehensible to someone with a different background. That doesn’t make them irrational. That just makes them a different sort of cat than you are.
What about when people self-harm or constantly sabotage themselves? That’s more of a Psychological question, but as far as we’re concerned – we take that to mean they are relieving more internal distress by acting out these behaviors than when they refrain from doing those things.
When we take the approach that all goal-directed behavior is Self-Interested, definitionally, it gives us an objective framework for examining all these different topics impartially and systematically.
Utility
Being Useful in a Very Satisfying Way
Utility is a specific term used by economists to talk about well-being. It's useful to have a weirdly awkward word to talk about a common concept - because the only time you'll hear someone using Utility in this way, is when they're talking Economics. Saying "Utility" instead of "well-being" or "happiness" or "success" avoids having to distinguish its scientific use from any colloquial meanings - like the issue of distinguishing Self-Interest from Selfishness.
The concept of Utility is closely tied to usefulness or satisfaction. Something that has Utility is useful in helping you satisfy your goals. Since all your goals are Self-Interested, we can also say that Utility is the thing your Self-Interest is seeking. These two concepts are different ways of discussing what is essentially the same thing.
Although it is possible to think about Utility as some objective quality that objects possess, Guinea Nomics takes the perspective that Utility is an entirely subjective experience determined solely by the person experiencing it. Instead of trying to debate how much Utility a strawberry inherently possesses, we would consider how much Utility that strawberry has for a specific person. Since we can't be in that person's head, we would infer how much Utility that person assigns to the strawberry by watching how they interact with it.
Although we can never know for certain, we can infer a lot about someone's subjective experiences, based on their real-world observable behaviors. If someone consistently choses apple slices over strawberries, across a broad range of situations, it would be appropriate to infer that they get more Utility from apple slices than from strawberries. Otherwise - why continue to chose the apple slices? There is something about the apple slices that aligns with that person's Self-Interest more than the strawberries. The apple slices are giving them more Utility.
This idea that objects and experiences can have different amounts of Utility is very important to the mathematical underpinnings of Economics. We can place things in order from highest to lowest according to the amount of Utility they have - for a specific person.
But it's important to remember that since Utility is subjective, we have no good way to compare one person's Utility to some other person's Utility. You can't really measure one person's happiness, or sorrow, or excitement against another person's - as if we're comparing their heights or weights.
There is no standard unit of measurement for Utility - like inches or pounds. But there is an arbitrary unit - called the Util. If you see the Util - be careful. Utils only apply to one person at a time. Don't try to mix and match one person's Utils with somebody else's.
Use Value
Use Value is the amount of Utility someone receives from an object or experience directly. Something that provides no Utility is "of no use" to that particular person. It has no Use Value. But it can still have a Trade Value or "be worth something."
Use Value is 100% determined by the person who uses or experiences the item in question. When someone's Use Value for something is higher than its Trade Value, they keep it. When the Trade Value is higher than their Use Value, they trade it.
Trade Value
Trade Value is the amount of Utility someone receives by way of the best offer they can get for the item in question. Trade Value only exists when you have someone to trade with, and is 100% determined by the preferences of your trading partners.
In a barter situation, something's Trade Value is equal to the amount of Utility you get from whatever you obtain as a result the trade - on in other words, your Use Value for whatever you are trading for. (If you can trade your strawberry for some apple slices - the Trade Value of your strawberry is the same as your Use Value for the apple slices.) In a Market, the Trade Value is generally the price an item can be sold at. But even when people sell something for money, they are still basing their trading decision on how much Utility they will receive directly from having the money - in other words, their Use Value for the money. which varies from person to person.
When someone's Use Value for a thing is higher than its Trade Value, they keep it. When the Trade Value is higher than their Use Value, they trade it.