About a month ago, I heard Dr. Walter Williams speak at the Heritage Foundation. He was giving a deliberately abrasive introduction to standard Libertarian ideas of government's role in the economy, with which I generally approve. At several points he was asked the inevitable question, "How can the poor/environment/elderly survive without the government to protect it against the ravages of capitalism?"
He answered, briefly, that if people were free to follow their selfish impulses, the problems would work themselves out. This is due to the idea of enlightened self-interest, i.e. that it is in the best interests of each individual to do things that benefit the group. (He gave the example of planting fruit trees on his property that he would never live to eat from, because doing so raises his property value.)
Now while this is often true, it is a problematic answer. I tend to be put off by the enthusiasm with which some defenders of the free market will trumpet selfishness as the cure for all our ills, for several reasons. First, this idea completely ignores the trouble of parasitism or free-riding, and the related problem of the Tragedy of the Commons. To wit, there are circumstances in which it is most advantageous for the individual to act to the detriment of society as a whole.
Second, people do not always follow their enlightened self-interest; often they prefer a short-term interest over a longer-term one, for more or less irrational reasons. To defend a system by saying that it works if everyone is rational is hardly a ringing endorsement.
Third, even aside from these issues, such a defense is worse than useless as a persuasive tool, which is ideally the point of the exercise in the first place. It runs counter to the everyday experience of most people, in which acts of selfishness cause hurt and acts of selflessness accomplish great good. Moreover, it reinforces the caricature of the greedy capitalist, and makes agnostics all the less likely to embrace capitalism; nobody wants to think of himself as a bad person, and you will usually get much farther by appealing to man's virtues than by excusing his vices (this is why advocates of abortion speak of "defending the rights of a woman's body" rather than granting permission to kill inconvenient babies, for example).
This all being the case, why then do so many people use this argument with so much glee?
I think we must look to the original question for our answer. "What will happen without government?" assumes that there is a large class of necessary civic functions that would simply be left as a gaping void, without the compulsion of government to ensure their performance. These functions now include such elementary things as feeding the poor and caring for the elderly, which would have been unthinkable not even a century ago.
Alexis de Tocqueville commented on the remarkable habit of Americans at the time to form more or less local associations to perform functions that Europeans would generally leave to the government. He gives the example of clearing a fallen tree from a road; while a European community of the 1830's would have called on the government to remove it, Americans would simply organize themselves and do the job on their own. (This sort of thing is so rare today as to be unheard-of in most of the country, sadly.)
One of the themes hammered on by the aforementioned Dr. Ryn in class is that Americans used to be motivated chiefly by a sense of virtue based on "Love your neighbor." That is, your first duty was to care for those closest to you, your family and your community. This led to a vibrant communal life, in which concerned citizens would care for each other and do what needed doing in the community, because that was what being a good person meant.
Now, on the other hand, we are encouraged to care for Humanity in the abstract (often to the detriment of individual humans right next to us). Since no individual could possibly care for all of humanity, we must delegate our responsibilities for humanity to an entity powerful enough to do so—namely, the government. Hence, we can pay our taxes, send off the government to do good on our behalf, and feel that we have discharged our obligation.
This is an exagerration, of course. But it is based on truth. It is often noted, for example, that Americans give much more charity per capita of GDP than do Europeans; this is explained most often by the tendency of Europeans to place social responsibility on the back of their governments, to which they pay so much in taxes. And this tendency is on the rise here as well. It is worth noting that the most generous states in the U.S. are not the richest—indeed, they tend to be the poorest—but tend to be least associated with expansive liberalism. The reverse is also true; those states most associated with liberalism and social welfare are disproportionally near the bottom of the rankings.
Ergo, many defenders of capitalism have apparently decided that they cannot appeal to any sense of communal obligation to explain why civilization will not collapse in the event of a free market; in some cases, they themselves are not keen on the idea of communal obligations either (this seems to be common in the troglodyte-wing of the libertarian or libertarian/conservative community). Instead, they are forced to appeal to pure selfishness, and give assurances that selfishness will bring about a new golden age.
This is a mistake, for the reasons I have already pointed out. Furthermore, selfishness as an ideal leads to a narrowing of the human spirit and is ultimately unsatisfying, perhaps immoral. If free-marketeers were smart, they would invest their energies in trying to reawaken the old spirit of communal responsibility in America. (I should really say, to spread the spirit of communal responsibility, for it is still alive and well in many communities.) It is this spirit that can make a free market work: the idea that the successful have a duty to care for the less fortunate, directly, without any reliance on governments to do the dirty work for us.
Indeed, statists of all types know that their greatest challengers are private benevolent organizations. Just look at the vitriol that is commonly poured upon the Boy Scouts...