At the Turn of the Year: A few Comments on the Public Interest and its Meaning

Essay by Kurt R. Leube

“People who intend only to seek their own benefit are led by an invisible hand to serve a public interest which was no part of their intention. I say that there is a reverse invisible hand: People who intend to serve only the public interest are led by an invisible hand to serve private interests, which was no part of their intention”. Milton Friedman (1912-2006)

I

To be sure, government programs intended to responding to and preventing the spread of infectious diseases or protecting its citizens from physical threats posed by others can be summarized as being conclusively in the Public Interest. These actions are considered to be among the core duties of any modern democratic state.  However, what is the essential meaning of the Public Interest?

From ‘shelter-in-place’ orders to indiscriminately enforced full or partial ‘lockdowns’, from a near collapse of critical world supply chains to trillions of dollars in government aid, the pandemic has rekindled the long-running passionate debate about the Public Interest. Countless important issues, including the market pricing of new vital vaccines or therapies, unconstitutional infringements on civil rights, contact tracing, private property on research facilities, on essential data or clinical trials, or even the enacting of the DPA (Defense Production Act) have come into focus. They are revealing the extent to which state control in the Public Interest is exerted over matters that will determine the ultimate human cost of the pandemic. Science, politics and policymaking have been characterized by biased and conflicting interpretations of the Public Interest concept.

Such conflicts matter, not only because each party pursues its own prejudiced view of the Public Interest that may sharply differ from the interpretations of others. It also weakens democracy, as people who cannot speak freely will not be able to think clearly, and no democratic society can flourish long when opponents are treated almost as heretics. However, it seems that the defenders of tolerance and freedom of speech regretfully have capitulated to people who claim free speech for themselves but not for others.

Thus, in both authoritarian and democratic regimes the response of governments to the outbreak of the virus in the name of the Public Interest has led to conditions and proposals that makes one think of George Orwell’s distressing Nineteen Eighty Four, a novel which grows more haunting as its futuristic agony becomes the new reality. It seems as if Covid-19 not only has come to result in government control of and intrusion into individual lives. Also for good or for evil, a sort of ‘pandemic police state’ apparently relies on large-scale surveillance, denunciation and has covertly amassed executive powers and administrative functions to an extent unthinkable in pre-pandemic times. As political power more often than not multiplies at the expense of the social power enjoyed by individuals, the effects of these policies and programs most likely will lead to a permanent increase in scale and scope of state control.

II

Centuries of scholarship in political philosophy have examined the Public Interest alongside other ageless political mantras. Common among most political philosophers was the acceptance of the pointless idea that governments ought to serve the people, and the people ought to be the beneficiaries of their governing.

However, shaped and conditioned by the ever-changing Zeitgeist, numerous conflicting and highly competitive interpretations and conceptions of this politically attractive slogan evolved over time. They range from utter platitudes to meaningless clichés to naive philosophical arguments. The political ideal to hold the mystical model of the common good or the Public Interest in higher esteem than any individual action, seems as old as statehood and has been discussed whenever and wherever regulatory adjustments for the general welfare have taken place. By and large, the literature is confusing and contradicting. However, we can trace this ideal as far back as Plato’s and the Platonist school’s suggestion, that only undisputable government officials have the wisdom to determine the common good. We also find the phrase in the descriptions of the various medieval totalitarian systems and in the countless socio-economic regulations during the Mercantilist era to promote national power (1). Likewise Jeremy Bentham’s legendary principle of the ‘greatest happiness of the greatest number’ comes to mind.

Arguably however, Auguste Comte (1798-1857) (2), by no means the inventor of the term, seems to have vastly influenced the underlying philosophy of the current reasoning. In his positivistic philosophy he insisted that social wholes are better known than the elements of which they consist and social theory therefore, ought to start from our knowledge of the directly examined entities. This idea consistently led Comte to suggest that only society as a whole is authentic and the many individuals who are forming the society are but an abstraction. In other words, individual actions must be suppressed if they do not serve the presumed yet mysteriously shrouded Public Interest. In such a model, where the values of the whole society would be equal to those of any particular individual, the Public Interest would have a substantive content, and by definition both the function and the motive of all government officials would be to formulate all their decisions in the Public Interest (3). Yet, contrary to the view that political actors are supposed to work together to altruistically advance some notion of the Public Interest, the reality proves to a certain extent different.

Among the most influential applications of this Public Interest ideal in our times are probably the works especially by Vilfredo Pareto (1848-1923) and A.C. Pigou (1877-1959) (4). Broadly summarized, their models assume that the accurate role of any democratically elected government is to operate for the greatest benefit of society as a whole. Accordingly, each citizen implicitly takes it for granted that a society must be viewed as a unit and thus has a single set of values that can be summarized into an outline for implementing a detailed policy. This single set of values supposedly makes up the Public Interest and hypothetically represents the will of the people. Over time this permeating catchphrase acquired an almost numinous meaning that entails a combination of inspiring expectations and appealing conjectures and keeps on arousing the fantasy of social scientists, intellectuals and politicians.

Although, a conceptual definition of the Public Interest ought to play the all-decisive role in determining any government program regarding the Public Interest, at least an operational classification of this ‘multi-purpose’ term apparently was and still is of no concern for those who use it constantly. Due to the lack of a clear definition, the ends which the Public Interest is to serve must in the first instance necessarily be confined to some meaningless general formula, which will be insufficient to determine any concrete plan, even if we take all the technical means as given. In other words, there is no rule book for working in the Public Interest and, because it is loose, ambiguous and politically quite easy to hide behind this enticing phrase, it became an integral part of the political dialogue, the body of law, of regulations and the governance of modern democracies. 

III

Regardless of their intent, most Public Interest regulations are meant to protect consumers from harm resulting from irresponsible or fraudulent behavior or preventing the spread of infectious diseases among countless other purposes. However, except in emergencies, most of these regulations are usually not designed and implemented in a socio-political vacuum. Rather, these rulings emerge in a communal environment populated by public as well as private self-interested political actors who possess the authority to coerce private citizens to do as they say. This new source of power has significant value to those who can influence and control it. In other words, the same lobby groups who might be the target of regulations will often have the strongest interest in attempting to manipulate rulings or guidelines for their own benefits. However, when coalitions of private interests are able to influence and control the content of regulations, they will produce benefits for them instead of serving the Public Interest. This makes any society, but in particular its citizens or consumers at large regularly worse off and results in a decrease of competition and an increase in costs.

Therefore, we ought to reconsider the decisive difference between an organization and a democratic society. The latter is ‘the result of human actions, not of human design’ (F.A. von Hayek) and is made up of independent people who are neither aware of a shared common purpose, nor do they knowingly serve it.

While a society of independent people is distinguished by spontaneous order and by scale-free networks, organizations on the other hand are hierarchical networks and are purposefully created, managed and monitored by human beings. To reiterate, social orders or associations develop through spontaneous growth as well as through some small measures of deliberate construction.

Spontaneous growth occurs when individuals and groups with limited knowledge interact with other individuals and groups, giving rise to unplanned patterns of behavior and institutional forms. In view of that, today’s democratic societies can only be defined as complex, yet unplanned systems of reconciled, but not shared values and actions.
Only during the slow but continual advancement of the human mind, individuals began to differ sufficiently to develop previously unarticulated social rules and behavior to the extent that deviate behavior could be corrected. Thus, in order to function properly every society (democratic or not) requires a minimal consensus entailing some basic rules, which allow its members to survive, communicate and predict the reactions of others to unknown social situations (5).

These ‘rules of just conduct’ (F.A. von Hayek) are in large parts end-independent rules and are rarely written down or identified as a minimal consensus, nor are they the outcome of an election or have ever intentionally been drafted. They are the ‘result of human action, not of design’ and suggest not only an implicit agreement on these basic rules. These creeds also hint at the tacit approval of guidelines regarding individual behavior and decision-making. However, the fact that not all fellows obey them does not invalidate their central importance and structural necessity.

Thus, a democratic society can neither be explained as a whole with a single purpose, nor can it be viewed as an organization in which people are not allowed to use their own unique knowledge of time and place for their own purposes. To recap, a society of free and independent people can only be defined as a complex, yet unplanned system of reconciled, but not shared values and has no mutual purpose or core curriculum. In other words, a society which does not approve of individual freedom and choices and which takes a common interest for granted, resembles an authoritarian organization, where every member follows orders and ought to be concerned with the completion of an assumed collective goal. Hence, it seems inconceivable that in a democratic society any policy that violates the minimal consensus with regard to the society’s own unwritten ‘rules of just conduct’ could be described as serving the Public Interest.

IV

It is neither possible to make an educated guess of what such a society with all its future constituents will, would, or even might say if and when it ever had a chance to vote. As we will never know what we ourselves will be thinking any number of years from now, much less what infants now in the cradle will be thinking when they reach the ability to vote, there is no point in playing with any notion of an imaginary plebiscite to discover the meaning of the Public Interest. In general terms, after all every individual neither intends to promote the Public Interest, nor has the knowledge of how much she or he is promoting it.

However, with some caveats and caution we may at least attempt to summarize the Public Interest not only as a situation in which men would choose if they saw clearly, thought rationally and acted disinterestedly or benevolently (6). It could also be described as a set of values oriented toward the assumed needs, desires, or interests of large numbers of people. In today’s democratic societies we may perhaps at least in essence distinguish three main functions of the concept.

First of all, in politics the term Public Interest can predominately be used as a method with which individual citizens not only evaluate whatever actions the government considers. Citizens can also discuss their judgments and opinions with their fellows and potential beneficiaries of particular government actions.

Secondly, as the Public Interest implies that there exists one common good known and appreciated by all members of society, the political appeal for the Public Interest and peer pressure may well be used as a tool to motivate all those who are hard-pressed by public bullying to act against their own will or interest.

And, as a third function, perhaps we will be able to perceive the concept of the Public Interest as being employed as a guide to and a test of the actions, failures or decisions of politicians and other public servants. It is especially this last function that proves extremely tempting and convenient for political representatives: in hindsight they can easily not only hide behind the phrase. With no troubles at all they can also be lured into actions or rulings that might be in favor of their own reelection bid.

(1)  See Joseph A. Schumpeter, History of Economic Analysis, New York 1954, Part II, especially chapter 7.

(2)  Among several other sources, see especially Harriet Martineau, The Positive Philosophy of Auguste Comte, 2 vols, London 1853; 2nd ed. Cambridge University Press 2009. Martineau, a former admirer of David Ricardo’s work became Comte’s most faithful disciple in England. It was largely through her work that Comte’s ideas made their entry especially into imperial Prussia and were enthusiastically embraced by the ‘Socialists of the Chair’ and Gustav v. Schmoller’s so-called ‘Younger German Historical School’.

(3)  The illuminating analysis by James M. Buchanan (with H.G. Brennan) became an instant classic: ‘Monopoly in Money and Inflation’, Hobart Paper 88, London (IEA), 1981. Pgs. 7-8.

(4)  Compare Israel M. Kirzner “Welfare Economics: A Modern Austrian Perspective” in: Man, Economy, and Liberty. Essays in Honor of Murray N. Rothbard; W. Block, Ed., L. von Mises Institute, Auburn 1988.

(5)  We owe these seminal insights to Friedrich A. von Hayek’s works on the evolution of spontaneous orders, of the law, the distribution of knowledge and the formation of societies. See especially Hayek’s most influential essay ‘The Use of Knowledge in Society’, The American Economic Review, Sep. 1945, reprinted in The Essence of Hayek, K.R. Leube & Ch. Nishiyama, Eds., Stanford 1984. Of special interest is also his Law, Legislation and Liberty, Vol. I, University of Chicago Press, Chicago 1973.

(6) Although, one might have some serious reservations and disagreements with Schubert’s arguments and use of terms, it seems instructive to read again Glendon A. Schubert’s The Public Interest: A Critique of the Theory of a Political Concept, The Free Press, Glencoe, IL, 1960.