The Massively Underappreciated Virtue of Egoism in Business

Profile picture of Carl Barney with smile on face

The following comments were written by Carl Barney, a highly successful businessman and regular reader of Dr. Michael Hurd’s writings. Carl Barney is the chairman of the Center for Excellence in Higher Education (CEHE), which consists of a group of eighteen colleges—Stevens-Henager Colleges, CollegeAmerica, California College San Diego. He is the chairman and founder of Independence University. The colleges offer associate’s, bachelor’s and master’s degree programs. He serves on the Board of Directors of: the Ayn Rand Institute, the Clemson Institute for the Study of Capitalism, the Cato Institute, and the Business Educators Research Association. His comments are all printed with his knowledge and consent.

Mr. Barney writes:

“I don’t think egoism/selfishness is in any way stingy, rigid, limited or contained. I see egoism as expansive, embracive, generous, joyous, complete. I do not think there is any dichotomy between me and mine, or even separation. I see an integration of me and mine. I see a multitude of ‘mines’ – my friends, my family, my colleges, my employees, my community, my country, my world, my ARI [Ayn Rand Institute]; and I value our mutual success and happiness of all my….

“Egoism is not self-centered or self-indulgent. I see an integration that includes all the above ‘mines’ and many more. [John] Galt’s ‘mines’ [in Ayn Rand’s Atlas Shrugged] were the Reardens and Dagnys of the world (and Dagny herself) and the entire country. He was dedicated to justice and the world as he wanted it to be. He could have stayed in the Gulch (been limited) but no, his ‘mine’ was those he considered his people and the country and the world. His egoism is vastly embracive and generous. His egoism is enormous.

“The coin of man’s life are thought, time, and money – in that order. Thought is the most valuable. Generosity with money is good, generosity with time is better, generosity with thought is best. I observe Ayn Rand’s selfish generosity with her ‘collective’ (her group of colleagues and friends) and the thinking and time she lavished on them, particularly [Nathaniel] Branden (sorry) and Leonard [Peikoff]. Observe the thinking and time and some money she generously and joyfully lavished on fans, family and friends. Amongst many examples in Letters [of Ayn Rand], see page 544 where she writes to answer questions from a fan. She is answering it on a train after being in Indianapolis where she spoke at a journalistic society, and also at Purdue University, so I’m sure she’s pretty tired; but, nonetheless, she handwrote the equivalent of almost 20 single typed pages! I couldn’t even begin to imagine being that generous.

“As to compensating employees: Justice in business, as you know, is crucial – one of its highest virtues and values. I joyfully practice justice in my company. My executives and staff do so many great things every day for the company and indirectly for me, and I’m so appreciative of it that I’m as generous as I can be with them. For instance, I buy all my staff and executives thoughtful Christmas gifts along with a ‘handwritten’ letter of appreciation and thanks – this is a joyous practice of justice.

“Another example of the practice of justice: I told my key executives that if they help me build the company to increase its value, I would reward them with large bonuses when the company was sold. Well, unfortunately, the company didn’t sell and while the executives were disappointed, they were accepting and understanding. But the justice of it bothered me. They did their part in growing the company and it was through no fault of their own that the company didn’t sell. (It was during the financial crisis.) I decided to give them large bonuses anyway. I explained to them that justice required it – that they had earned and deserved it and it would be paid.

“I spoke to each individually, one after another, thanked them sincerely, and presented them with large checks. The emotional responses were explosive. I personally paid out millions in these bonuses, but I can tell you this: It never ended up costing me a penny. Justice doesn’t cost; it pays. And that’s the point with justice with employees and others, and all of the other virtues too, it pays! (My executive turnover is extremely low and the loyalty is to be envied.)

“So, my view is that egoism/selfishness is expansive, generous, joyful, complete and profoundly rewarding.”


Dr. Michael Hurd’s replies:

Mr. Barney’s ideas on “expansive egoism” smash through the prevailing prejudices regarding self-interest.

How so? “Ego” refers to the self. Without a self, there is nothing noteworthy about a person. There is nothing about a person to have an impact. A self is a person’s identity: The sum total of an indivdiual’s wants, wishes, desires, cognitions, premises, values, actions and character (or lack thereof).

To lack a self would not merely be boring; it would mean lacking an identity. Success and accomplishment presuppose and require a huge amount of self-generated thought, energy, action, dedication and commitment. Without a self in the first place, there can and will be none of these things.

We are trained to minimize or even condemn self-interest. But in the process of doing so, we literally denigrate the self; the very thing we’re counting on to generate the activity or accomplishments we’re otherwise praising. It makes no sense at all.

Notice how Mr. Barney focuses on the virtue of justice. Justice does not only apply to government or laws; it applies to the more routine aspects of daily life. It’s not only an abstraction. It’s the stuff of everyday business.

When you act with justice, and when you exhibit the virtue of justice in daily life, you give to each person that which he or she objectively deserves, verbally, morally, in terms of financial compensation, in terms of love, admiration or respect – whatever is appropriate to the particular context of a relationship. You make an objective assessment of what a person deserves and merits, and you treat him or her accordingly.

You cannot ultimately succeed in business without the principle of justice. Justice is a virtue, but it involves the practical implementation of a necessary skill in business relationships. Without justice, you won’t treat the extraordinary employees with the respect they require and the compensation they deserve; and without justice, you won’t weed out the less valuable employees. If it’s correct that you need excellent employees in order to make a profit, then justice (objectively and rationally dispensed) is an essential, practical attribute of any business

As a business owner, it’s in your own interest to maximize the amount of talent available to the company or business. We’re repeatedly told and taught that self-interest is bad, and that only a selfless and charitable approach to relationships leads to businesses worthy of the name; but without the objectivity and virtue of justice, there won’t be any business in the first place.

For example, when a business owner fires or fails to advance mediocre or poor employees, external critics will condemn the business owner for not being fair or just. But what does keeping or advancing the poor staff do to the rest of the business? What about the employees working harder and better? Should the business flounder or go under for the sake of the less able, the less hard-working? And if so, how is this “social justice” – or any other kind of justice?

Governments pass laws to force business owners to take actions they would never otherwise take. These laws replace the judgments of the business owner, who carries the risk and knows what he’s doing, with the judgments of politicians and bureaucrats who have absolutely no skin in the game. They know little or nothing of what they’re doing, but incredibly, these laws are passed in the name of justice and fairness, while in fact they prevent the business owner from actually operating in a just way.

Bonuses are a very powerful tool for exercising self-interest and justice in business. When you give an employee more than what you promised, and when you do so because they objectively deserve it, then you reward the best qualities that will likely get you even better results from them in the future.

As Mr. Barney put it, he gave out millions in bonuses over the years, yet never spent a penny on them. He got more back than he paid in the increased loyalty and productivity these bonuses generated.

Politicians and other self-appointed moralists – to whom most of us listen, tragically – are quick to lecture that businesses are too selfish and should always “put people first.”

The question here is: Which people? And for what reason? Should everyone be rewarded bonuses regardless of how they perform? Is objectivity unnecessary and even unfair? If it’s true, as we’re told, that “discriminating” is automatically and always wrong (sometimes even illegal), then what’s supposed to replace the distinctions we make among the mediocre, the excellent, the unparalled or the destructive?

In reality, discrimination can be right or wrong, arbitrary and irrational (as in racism) or well-founded (as in distinctions between excellent and mediocre work performance). If a business owner or manager is incapable of making competent and effective distinctions, including rationally discriminating, then the business will flounder or fail. Since when did “discrimination” only come to refer to irrational and unfounded prejudice, something that goes against the profit-seeking nature of any business, large or small?

We’re told that “social justice” trumps “regular” justice, which presumably means objective justice. Objective justice is the kind that leads Mr. Barney and others to reward people according to their ability and choices, demonstrated in practice. “Social justice” is a vague, often undefined term, but in practice it usually leads (often with legal backing) to the equal treatment of everyone regardless of their individual performance, character, willingness or level of productivity. Consistently enforced, “social justice” in place of actual or real justice would result in the end of business success as we know it.

“Ego” and “egoism” have a horrible reputation. Egoism is widely considered the sacrifice of others for the sake of oneself. But as Mr. Barney points out, the most unprofitable, self-destructive and un-self-interested thing a business owner could do would be to sacrifice the employees upon whom he depends for excellence and competence. He harms them by not promoting and rewarding them, and he harms himself by not doing so. By the same token, and for the same reasons, he harms himself (and those good or excellent employees) by failing to fire or minimize the activity of the less effective, less skillful, less motivated employees.

What about the charge that egoism is self-centered and self-indulgent? It all depends on the interests that the particular person or “self” is trying to advance. Are the self-focused actions of a heroin addict the same as the self-focused actions of a productive entrepreneur? Obviously not. The girlfriend of a heroin addict will have complaints about her boyfriend, not because he’s self-indulgent but because he has warped or destroyed his means of cognition and survival, i.e., his mind. On the other hand, the girlfriend of a successful entrepreneur who works 100 hours a week might have similar complaints of self-indulgence; but clearly this entrepreneur is involved in productive activitiy that not only benefits his own life, but hers as well; giving her cause for admiration rather than grief. This particular boyfriend might or might not be the right match for her. But he’s certainly an infinitely better boyfriend or spouse than the heroin addict. Yet both could be labeled “self-indulgent” according to the standards by which that term is usually described.

Clearly, it’s not egoism or self-indulgence that’s the problem. It’s not the presence of a self that ruins people or relationships. It’s what one does with one’s self. In the extreme case of self-negligence, as with the heroin addict, there’s actually a lack of self-interest contributing to the problem.

Self-interested people do not flee into non-reality to ruin their minds or ability to survive. So self-interest should stop getting the blame for all that ails not only relationships, but the whole economy and the whole world, if our elected leaders and officials are to be believed.

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