the virtues of private morality, if applied in the political realm,
often lead to failure. Thus, Machiavelli differed from his intellectual predecessors in that he described the way people really
live, as opposed to the way they ought to live.
A discussion on leadership cannot be divorced from
considerations on strategy and, of particular interest to the
readers of Contingencies, implications for the business world.
The link is obvious when one realizes that the Greek noun
strategos was originally applied to the army’s commander-in-chief, who concerned himself not with the details of battle
preparation (the responsibility of lower-rank officers) but
with larger actions aimed at achieving victory—what we today call strategy—much like a modern CEO charts the course
of action for his or her company.
Harnessing self-interest
Machiavelli’s opinion that selfishness is part of the human
condition, although distressing to some, is commonly shared
by economists, mathematicians, anthropologists, evolutionary
biologists, and social scientists. Adam Smith, for example, understood that self-interest is ever-present in human affairs and
believed that it is frequently beneficial to society. Mathematicians and political scientists developed game theory under the
premise that players attempt to outdo their opponents. Most
evolutionary anthropologists believe that selfishness, an element of the instinct of self-preservation, has been essential for
the survival of the human species.
Analogous ideas have been advanced by others. The Greek
historian Thucydides, writing in the fifth century B.C., states in
his History of the Peloponnesian War that appeals to justice and
morality are pointless in human affairs:
We both know that decisions about justice
are made in human discussions
only when both sides are under equal compulsion;
but when one side is stronger,
it gets as much as it can, and the weak must accept that.
Thucydides reasons that wars show the face of self-interest, as they are often the product of fear, envy, or greed,
rather than the impulse to correct moral transgressions. Modern readers know that corporate takeovers rarely, if ever, are
grounded on concepts of moral virtue (they may be the result
of a legitimate desire to optimize the use of resources), layoffs
are seldom averted by references to social justice (they may
respond to the pressing need to reduce expenses), and power
games and politicking are rarely discouraged by invocations
of ethical principles.
Game theory can be considered an attempt to analyze self-interest and its consequences. One of its well-known models,
the “tragedy of the commons,” is widely used in policymaking
because it helps identify the incentives that trigger players’ actions. Picture a pasture that is public property (the commons)
where people can graze their cattle. This resource attracts the
attention of more and more ranchers seeking to feed their
herds for free. Although everyone realizes that the commons
will be depleted and that it would be in the interest of every
party to ration the grazing, few, if any, will cut back their use of
the commons. The reason for this seemingly irrational behavior is that everyone understands that if he or she limits his or
her use of the pasture, others will not, thus taking advantage
of concessions made by those interested in the preservation
of the public good.
There are three possible solutions to the tragedy of the
commons:
■ Establish property rights by privatizing the commons—
the owner will charge grazing fees, forcing the ranchers to
use it sparingly;
■ Use government force to require the different parties to act
according to public interest;
■ Persuade the parties to negotiate (an option that only works
if the group is small).
One successful application of the tragedy of the commons
is in the design of policies to curb pollution, where the right
to pollute is “privatized” through the sale of permits that authorize companies to emit a controlled amount of pollutants.
When companies are required to pay for the harm they do
to others, enterprises have a palpable financial incentive to
minimize their emissions.
The tragedy of the commons can also be applied when
studying the design and implementation of a universal health
care plan. Most industrialized countries followed the second
approach—government intervention—whereas the U.S., if it
ever moves toward universal coverage, probably will rely on
the first, maintaining a private system as much as possible.
The discussion of such an undertaking requires analysis that is
beyond my scope here. But it must be recognized that any plan
that doesn’t pay enough attention to the interests of powerful
groups is unlikely to succeed, no matter how well-engineered
and socially desirable it may be.
In general, social systems that underplay the role of self-interest are destined to fail. The collapse of communism affords
a dramatic confirmation of the pivotal role that self-interest
plays in human affairs. Whereas Marx and others correctly diagnosed the importance of self-interest in a capitalist system,
they naively believed that under a communist regime such a
human trait would be transformed into concern for the common good. Thucydides said it masterfully:
It is an impossible thing—you would have to
be simple-minded to believe that people can be deterred,
by force of law or by anything else that is frightening,
from doing what human nature is earnestly bent on doing.
Yet despite the pervasiveness of self-interest in human affairs, Machiavelli states that a prince whose acts are governed
exclusively by self-interest is unlikely to succeed for three reasons: first, he has no absolute control on fortuna (chance);
second, other people are unwilling to help unless they see a
gain in doing so; and third, in society, a single individual can’t
