A remarkable essay on “effective altruism” by Financial Times columnist Martin Sandbu conveys much information on that fad (see “Effective Altruism Was the Favoured Creed of Sam Bankman-Fried. Can It Survive His Fall,” December 29, 2023). But don’t make this sort of altruism your New Year’s resolution.

Effective altruism aims at maximizing the good that a charitable action does. It is a moral offshoot of Benthamite utilitarianism as is cost-benefit analysis. Both theories fail for the same reason, which is, as Anthony the Jasay repeats, that they are based on somebody’s say-so: they try to calculate the relative values of different consequences by comparing the subjective utility gained or lost by different individuals. An action will be effective altruism if it promotes the “greatest good for the greatest number”—for example, if 100 individuals each gain 10 units of utility and one individual loses 100. Note that the same reasoning applies if one individual (a “utility monster”) gains 1,000 in utility while 100 lose only 5 each.

Utilitarian “calculations” are guesses based on intuitions. If $1 is stolen from Bill Gates and given to a homeless person, it looks sensible to say that the former loses less utility than the latter gains; and that, therefore, the total “social utility” or “social welfare” increases. Even if the theory seems reasonable in such extreme cases, it loses any intuitive support in most real-world problems. Is it possible that the Nazis gained more utility than the Jews lost? A more pedestrian case: when one of the 400 wealthiest American households pays $126 million in annual taxes (which is the actual average—see Gramm et al., The Myth of American Inequality, Table 7.1, p.102), is it really worth less for the household members than for the beneficiaries of the new great government projects made possible with this increase of 0.000018 in total government expenditures?

Nobody who answers yes or no to these questions is capable of providing a demonstration with which a goodwill analyst will have to agree. The problem is that a utilitarian calculus is made by adding and comparing the unobservable and subjective valuations of millions of persons. Moreover, tracing long-term consequences is an epistemological impossibility. Any pretend calculus of the balance of utility is just the author’s own guess, supposedly valid because (as Anthony de Jasay notes) he says-so.

Every charitable person tries to contribute to the causes he finds most worthy. That these evaluations vary widely is shown by the very large number of charitable acts and charitable organizations. Over and above this diversity in charitable activities, a general claim for realistic and “effective” altruism should focus on how individuals signal their needs, as they each perceive them, by serving other individuals’ demand on markets. In other words, effective altruism cannot ignore the efficiency of a market society moved by effective price signals and based on an ethics of reciprocity and formal (not coercive) equality.

Many who have jumped on the bandwagon of effective altruism are rich entrepreneurs, business executives, and youngsters, all morally disoriented and typically not cognizant of economics. It would be highly desirable that they look instead toward classical liberal ethics, of the sort James Buchanan, Friedrich Hayek, or Anthony de Jasay have been defending.

Let me give four examples of what I mean by altruism coherent with classical liberalism. First, consider the Industrial Revolution when, for the first time in the history of mankind, ordinary individuals in the West were left free to try to improve their situation on markets and thereby escaped millennial poverty. Second example, closer to our own time: thanks in large part to less impeded international trade, the proportion of people living in extreme poverty in the world dropped from 44% in 1981 to 12% in 2013, despite a 60% increase in population. The rate of decrease in poverty has slowed down in the last 10 years.

My third example is a specific case of poor people who self-reliantly try to better their conditions by serving customers on markets. Many of my readers must have had the same computer experience as myself: You ask for technical support—say, to Microsoft, which has much improved recently in this respect, at least if you have a very basic business account. You will be able to easily and rapidly get a techie on the phone and on your screen. It is most often somebody with a strong accent, working from India, Africa, or another underdeveloped part of the world. Sometimes, you hear a dog barking in the background and you can nearly imagine the chickens running around. The person is trying hard to help you because this allows him or her to get out of poverty. Being understanding and tolerant toward these people amounts to liberal and effective altruism.

Moreover, Microsoft could not offer such good technical support without resorting to inexpensive manpower (contributing, at the same time, to bidding up these people’s wages). It is, by the way, the same for poor people working in “sweatshops” who make inexpensive shoes and clothes for you and your family.

My fourth example of really effective altruism is to fight protectionism pushed by special interests and relatively rich workers in your own country.

If one does want to be a truly effective altruist, I suggest that his New Year resolution should be to promote free trade and commerce. There is no way to be an effective altruist the way it is currently preached.