The Lie of the Selfish Self
Why economics taught us to distrust our own capacity for goodness — and what it cost us
In the early 1990s, residents of the Swiss village of Wolfenschiessen were asked to make a decision that would affect generations.
The Swiss government needed a site for nuclear waste storage, and their community was under consideration for a repository at the nearby Wellenberg mountain. Researchers surveyed villagers to understand how they felt about the proposal. About half indicated they would accept the facility; not because they wanted it nearby, but because they understood that someone would have to carry this burden for the common good. Wolfenschiessen’s local authorities approved cooperation with the project in 1994, but voters in the canton of Nidwald rejected the Wellenberg proposal in 1995 and again in 2002, ending the plan at that site.
Then something unexpected happened.
In the researchers’ survey, the government offered financial compensation.
According to standard economic theory, this should have increased acceptance. Instead, support collapsed; falling to just 25 percent. What had once been framed as a civic responsibility had been transformed into a transaction. The introduction of money did not strengthen cooperation. It dissolved it. The villagers no longer wanted to participate.
This episode reveals something quietly profound about human nature. Something modern economic thinking has spent decades denying.
We are not only self-interested maximizers responding predictably to incentives. We are also moral beings, sensitive to meaning, trust, and intention. When decisions are framed as shared obligations, many of us rise to the occasion. When they are reduced to price signals, something essential disappears.
Yet for more than half a century, we have been taught the opposite story.
Neoclassical economics rests on a deceptively simple premise. Humans are rational, self-interested actors who cannot be trusted to cooperate without external enforcement, positive and negative. From this assumption flows an entire worldview. One in which markets and regulation are not just useful, but absolutely necessary to restrain our worst instincts.
Left to our own devices, we are told, cooperation collapses. Shared resources are depleted. Trust erodes.
This is often presented as scientific realism.
But it is, at best, a partial story; and at worst, a deeply misleading one.
Two models have been especially influential in shaping this view. The Tragedy of the Commons and the Prisoner’s Dilemma. Both are taught with near-scriptural authority in economics departments, business schools, and policy circles. Both are used to justify far-reaching conclusions about governance, incentives, and human motivation.
And both rest on assumptions. Assumptions that not only don’t bear scrutiny but that also quietly strip away much of what makes us human.
The Tragedy of the Commons, popularized by ecologist Garrett Hardin in 1968, imagines a shared pasture that is inevitably overgrazed as each herder rationally adds more cattle. The moral seems clear. Common resources are doomed unless privatized or tightly regulated.
What is less often mentioned is that Hardin never studied actual commons.
His scenario was a thought experiment; one that confused true commons, which are governed by rules and norms, with open-access systems that lack any form of stewardship. It was as if one observed an unmanaged kitchen descend into chaos and concluded that shared kitchens, like those in top restaurants, are impossible.
Real commons tell a different story.
Elinor Ostrom spent decades studying how communities actually manage shared resources: Swiss alpine meadows, Japanese forests, Spanish irrigation systems. Her research, which earned her a Nobel Prize, showed that well-governed commons often endure for centuries. She cited the example of local fisheries self-regulating to make sure that no one over-fished and reduced stocks below sustainable levels.1 George Monbiot used the example of the Turkana people in Kenya who fed their goats from the pods of the acacia tree growing on the banks of the river. A group of elders from the community ensured that no one overfed their goats to protect the commons for future generations.2
What sustained them was not privatization or centralized control, but trust, reciprocity, reputation, and locally evolved rules. People cooperated not because they were coerced, but because they belonged to a community.
The tragedy, it turns out, was not inevitable overuse.
It was misunderstanding.
The Prisoner’s Dilemma offers a similarly bleak portrait.
Two individuals, arrested on suspicion of a joint crime, are held in separate rooms and cannot communicate. Each is given the same choice: stay silent (cooperate with the other prisoner) or confess and implicate the other (betray/defect). The options and typical outcomes are:
If both stay silent (both cooperate), the evidence is weak; each receives a light sentence (for example, 6 months).
If one confesses while the other stays silent, the confessor goes free, and the silent prisoner receives a heavy sentence (for example, 10 years).
If both confess (both betray), each receives a moderate but worse-than-cooperation sentence (for example, 5 years).
Because each prisoner reasons that betraying yields a better personal outcome regardless of what the other does, the “rational” choice for both is to defect. The result: both confess and both end up worse off than if they had trusted each other and stayed silent. The lesson appears obvious: trust is irrational unless enforced.
But the game is rigged and clearly contrived in a way most everyday situations are not.
There is no shared history.
No future relationship.
No communication.
No reputation.
No moral consideration.
Strip away memory, language, and relationship, and cooperation predictably fails. But this tells us little about real human life, where interactions are repeated, identities matter, and trust accumulates over time.
When the same game is played iteratively, as most human interactions are, cooperation emerges.
When communication is allowed, coordination follows.
When reputation matters, trust becomes rational.
The models prove cooperation impossible only by excluding the conditions under which cooperation actually occurs.
Over time, these frameworks have done more than describe behavior. They have shaped expectations. They have taught us to assume the worst of one another; and in doing so, have helped produce that exact outcome.
If people are inherently untrustworthy, then commons must be enclosed.
If cooperation requires enforcement, power must concentrate.
If morality is inefficient, only incentives matter.
This is not a neutral worldview. It carries political and ethical consequences.
By framing humans as fundamentally suspect, it justifies the transfer of authority away from communities and toward institutions. It privileges control over trust, surveillance over relationship, and efficiency over meaning.
What gets lost is not only cooperation, but dignity.
And yet, evidence of our cooperative capacity surrounds us.
Open-source software powers much of the internet through voluntary collaboration. Wikipedia, one of humanity’s largest shared knowledge projects, is maintained by millions of unpaid contributors. Mutual aid networks emerge spontaneously during crises, long before formal systems respond.
Even in Wolfenschiessen, villagers were prepared to shoulder an enormous burden; until their moral reasoning was reframed as a market exchange.
The deeper tragedy is not that commons fail.
It is that we have been taught to distrust our own capacity for goodness.
The word economics comes from the Greek oikonomia: the management of a household. It once referred to the art of living well together, of caring for a shared home with wisdom and restraint.
Modern economics has largely forgotten this origin. Too often, it explains inequality rather than questioning it, rationalizes exploitation rather than examining cooperation, and treats power as a given rather than a moral problem.
Recovering a fuller picture of human nature does not require denying self-interest. Yes, we are capable of competition, hoarding, and selfishness. But we are also capable of generosity, restraint, and extraordinary cooperation. Especially when trust is extended rather than withdrawn.
What we assume about people shapes the systems we build.
When we assume the worst, we design for control.
When we assume the possibility of goodness, we design for participation.
The stories we tell about human nature quietly become self-fulfilling. They shape institutions, incentives, and expectations; and, over time, behavior itself.
The big lie economics tells about you is not that you are selfish.
It is that this is all you are.
© The Good Human Practice | Published every other Thursday
If this resonated, I’d love to have you as a free subscriber — and forward this to a leader who is reflecting on clarity and character in how they make their decisions.
The Good Human Practice is a biweekly reflection on living with purpose, not just profit — written as I try to reconcile what’s happening in the world with what the great traditions teach us, and what I believe it means to live and lead well.
There are no tidy conclusions here. Only honest reflection and contemplation.
The inner work of leadership has a counterpart. If you’re also navigating high-stakes decisions and want frameworks for the outer clarity, I write separately about that in a free Substack newsletter: theuncertaintyedge.com
C. Asquith, (2016, February 22). Interview: Nobel Laureate Elinor Ostrom on Why Climate Change Solutions Work Best When They’re Local. The Solutions Journal. Retrieved March 26, 2022, from https://thesolutionsjournal.com/2016/02/22/nobel-laureate-elinor-ostrom-on-why-climate-change-solutions-work-best-when-theyre-local/
G. Monbiot (1994). “The tragedy of enclosure.” Scientific American, 270(1), 159.