While exchanging comments with all-around good guy Randy Brandt in response to Plato had it backwards, I got off on a tangent about ethics. In the comment I said:

Moreover, I suspect that the major features of ethics that we agree on are based on enlightened self-interest. By enlightened I mean a broad, mature viewpoint - not just individual self-interest.

The idea that self-interest could be at the root of ethics is, of course, a totally unexpected paradox. Classical ethics puts selfishness very near to the root of all evil.

To help explain what I mean by enlightened self interest, let's examine a game called Prisoner's Dilemma. The game goes like this - two people have an exchange in which each chooses whether to cooperate with the other or refuse to cooperate or "defect".

• If both choose to defect on the other, both get 1 reward
• If both choose to cooperate with the other, both get 3 rewards
• But if one decides to defect and the other decides to cooperate, the defector wins 5 rewards and the cooperator gets nothing at all.

If this game is played just one time, the only rational move is for both players to choose defection. Defection has an average score of 3; cooperation has an average score of 1.5. Moreover, defection removes the possibility of the very unpleasant outcome of the other player winning 5 rewards and you getting none.

However, if the game is played repeatedly with an unknown end point, the best strategy changes completely.

The Wikipedia article on the Prisoner's Dilemma that I linked to above includes the following summary of material from The Evolution of Cooperation by Robert Axelrod.

Axelrod discovered that when these encounters were repeated over a long period of time with many players, each with different strategies, "greedy" strategies tended to do very poorly in the long run while more "altruistic" strategies did better, as judged purely by self-interest. He used this to show a possible mechanism for the evolution of altruistic behavior from mechanisms that are initially purely selfish, by natural selection.

The best deterministic strategy was found to be "Tit for Tat", which Anatol Rapoport developed and entered into the tournament. It was the simplest of any program entered, containing only four lines of BASIC, and won the contest. The strategy is simply to cooperate on the first iteration of the game; after that, the player does what his opponent did on the previous move. A slightly better strategy is "Tit for Tat with forgiveness". When the opponent defects, on the next move, the player sometimes cooperates anyway, with a small probability (around 1%-5%). This allows for occasional recovery from getting trapped in a cycle of defections. The exact probability depends on the line-up of opponents. "Tit for Tat with forgiveness" is best when miscommunication is introduced to the game - when one's move is incorrectly reported to the opponent.

By analyzing the top-scoring strategies, Axelrod stated several conditions necessary for a strategy to be successful.

Nice
The most important condition is that the strategy must be "nice", that is, it will not defect before its opponent does. Almost all of the top-scoring strategies were nice. Therefore a purely selfish strategy for purely selfish reasons will never hit its opponent first.

Retaliating
However, Axelrod contended, the successful strategy must not be a blind optimist. It must always retaliate. An example of a non-retaliating strategy is Always Cooperate. This is a very bad choice, as "nasty" strategies will ruthlessly exploit such softies.

Forgiving
Another quality of successful strategies is that they must be forgiving. Though they will retaliate, they will once again fall back to cooperating if the opponent does not continue to play defects. This stops long runs of revenge and counter-revenge, maximizing points.

Non-envious
The last quality is being non-envious, that is not striving to score more than the opponent (impossible for a nice strategy, i.e., a 'nice' strategy can never score more than the opponent).

Therefore, Axelrod reached the Utopian-sounding conclusion that selfish individuals for their own selfish good will tend to be nice and forgiving and non-envious.

If the take-away from the Prisoner's Dilemma is that it is in your best interest to act ethically, the point of moral education becomes teaching children about the bigger picture of enlightened self interest.

Unlike those guided by raw selfishness, those guided by enlightened self interest would be:

• nice
• forgiving
• just
• uncompetitive

Sounds like a moral system to me, based entirely on self-interest.

In his book The Wisdom of Crowds, James Surowiecki writes,

The evolution of capitalism has been in the direction of more trust and transparency, and less self-regarding behavior. Not coincidentally, this evolution has brought with it greater productivity and economic growth.

The evolution did not take place because capitalists are naturally good people. Instead it took place because the benefits of trust - that is, of being trusting and being trustworthy - are potentially immense, and because a successful market system teaches people to recognize those benefits…For an economy to prosper, what's needed is not a Pollyannaish faith in the good intentions of others - caveat emptor remains an important truth - but a basic confidence in the promises and commitments that people make about their products and services.

Just as self-interest has to be enlightened before it becomes the basis of a moral system, greed has to be enlightened before it can become the basis of a working capitalist economy.

The greed of cheats destroys capitalist economies by reducing the amount of trust the parties in the system have. The enlightened greed of fair dealing enhances capitalistic systems by increasing trust and the benefits received by all players.

Paradoxical, isn't it?