Private Interests

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Private Interests

THE PUBLIC INTEREST AND AMERICAN POLITICAL THOUGHT

The distinction between public and private interests has deep roots in the Western political tradition, dating back to ancient times. Roman philosopher Marcus Tullius Cicero (106–43 BCE), for example, defined a “republic” as “the property of the people” and argued that the power of the state should be used only to advance the common interests of its citizens. More recently political theorists of widely varying views have argued that government power should only be used to promote the public interest rather than purely private ones.

Seventeenth-century English philosopher John Locke (1632–1704) and later theorists in the liberal social contract tradition contended that the functions of the state should be limited to those that flow from the purposes for which the people consented to be bound by the government. Should government power exceed its assigned purposes and begin to serve the narrow interests of private individuals at the expense of the general public, the latter would no longer be bound by its laws and might even have a right to rebel.

THE PUBLIC INTEREST AND AMERICAN POLITICAL THOUGHT

Distinctions between public and private interests have also played an important role in the American political tradition. Like Locke, many of the Founding Fathers believed that the powers of government should be limited to promoting the public interest, as opposed to promoting the selfish parochial interests of individuals or “factions.” The Preamble of the U.S. Constitution reflects this belief, stating that the purpose of the new government is to “provide for the common defense and general welfare,” a phrase repeated in the Constitution’s Spending Clause, which grants Congress the power to raise taxes in order to “provide for the common Defense and General Welfare of the United States.” The phrase “General Welfare” was understood to exclude the possibility of expenditures intended for the sole benefit of particular states and individuals, though there was much disagreement about where the line between “general” and local or private interests should be drawn. In the nineteenth and early twentieth centuries, American courts would periodically invalidate various economic and other regulations on the grounds that they represented “class legislation” intended to benefit narrow interest groups at the expense of the general public.

From ancient times to the present, however, advocates of differing ideologies have disagreed over the question of what interests truly count as “public” and which are merely private. The rise of the modern welfare state accentuated such divisions. Liberals and egalitarians view many redistributive programs as essential to the promotion of the public interest, while libertarians and conservatives see them as wealth transfers to narrow interest groups promoting purely private interests. The concept of the public interest maintains its hold on our imagination in part because we can each define it in a way conducive to our own preferred ideology and self-interest.

PUBLIC AND PRIVATE GOODS

Modern economic theory helps to shed light on the distinction between private and public interests through the concept of public and private goods. A public good is characterized by the fact that it is nonrivalrous and nonexclusive. Consumption of the good by one person does not prevent simultaneous consumption by others; nonexclusivity implies that, once the good is produced, it is impossible to exclude anyone in the relevant group from its benefits. A classic example is clean air. One person breathing clean air does not prevent others from enjoying it as well, and once air pollution has been eliminated in a given area, it is impossible to exclude anyone in that territory from benefiting from its removal. Standard public goods theory concludes that, absent government intervention, public goods will tend to be underproduced by the market, since individuals will have little or no incentive to contribute to their production. Instead, many may seek to “free ride” on the efforts of others.

The distinction between public and private goods offers a possible way to draw the elusive line between public and private interests. In theory, the production of a public good is in the interests of everyone in the relevant population, yet underproduction is likely in the absence of government intervention. Thus, the provision of public goods may well be coextensive with the public interest. By contrast, private goods will usually be adequately produced by the market, and so their attempted production by government is likely to advance only private interests, transferring wealth from the general public to narrow interest groups or individual citizens.

However, the production of public goods does not fully capture the concept of the public interest as it is understood by either ordinary citizens or many political theorists. If, for example, the idea of the public interest includes some commitment to distributive justice, wealth transfers that provide only private goods may still be viewed as “public.” Unemployment insurance, old age pensions, and most other welfare state programs provide benefits that economic theory would classify as private goods. Yet, an argument can be made that these programs nonetheless advance the public interest.

As a proxy for the public interest, public goods theory may be overbroad as well as underinclusive. Recent scholarship shows that traditional public goods theory may have been too quick to conclude that public goods will always be underproduced by the market. Scholars have identified several mechanisms by which an optimal level of public good production can occur even without government intervention. For example, private “planned communities” effectively produce such public goods as security and local pollution control for their residents. It may not be in the public interest for government to try to provide those public goods that are already produced in close to optimal quantities by market mechanisms.

Ultimately, the distinction between public and private interests is very difficult to define because it is more a normative concept than an empirical or theoretical one. Economics and other social sciences can help us understand whether or not a particular goal can be better achieved by the state or by the private sector. But they cannot, in and of themselves, prove that it is in the public interest.

SEE ALSO Defense; Defense, National; Locke, John; Private Sector; Public Goods; Public Interest