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Self-interest, Sympathy and the Invisible Hand: From Adam Smith to Market Liberalism

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  • Avner Offer

Abstract

Adam Smith rejected Mandeville’s invisible-hand doctrine of ‘private vices, publick benefits’. In The Theory of Moral Sentiments his model of the ‘impartial spectator’ is driven not by sympathy for other people, but by their approbation. The innate capacity for sympathy makes approbation credible. Approbation needs to be authenticated, and in Smith’s model authentication relies on innate virtue, which is not realistic. An alternative model of ‘regard’ makes use of signalling and is more pragmatic. Modern versions of the invisible hand in rational choice theory and neo- liberalism are shown to be radical departures from the ethical legacy of Enlightenment and utilitarian economics, and are not consistent with Adam Smith’s own position.

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Bibliographic Info

Article provided by World Economics Association in its journal Economic Thought.

Volume (Year): 1 (2012)
Issue (Month): 2 (December)
Pages: 1

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Handle: RePEc:wea:econth:v:1:y:2012:i:2:p:1

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References

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  1. Robert Sugden, 2009. "Can Economics be Founded on 'Indisputable Facts of Experience'? Lionel Robbins and the Pioneers of Neoclassical Economics," Economica, London School of Economics and Political Science, vol. 76(s1), pages 857-872, October.
  2. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
  3. Offer, Avner, 2007. "The Challenge of Affluence: Self-Control and Well-Being in the United States and Britain since 1950," OUP Catalogue, Oxford University Press, number 9780199216628.
  4. Samuels,Warren J. Assisted by-Name:Johnson,Marianne F. Assisted by-Name:Perry,William H., 2011. "Erasing the Invisible Hand," Cambridge Books, Cambridge University Press, number 9780521517256, October.
  5. Smith, Adam, 1776. "An Inquiry into the Nature and Causes of the Wealth of Nations," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1776.
  6. Smith, Adam, 1759. "The Theory of Moral Sentiments," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1759.
  7. Avner Offer, 1997. "Between the gift and the market: the economy of regard," Economic History Review, Economic History Society, vol. 50(3), pages 450-476, 08.
  8. William D. Grampp, 2000. "What Did Smith Mean by the Invisible Hand?," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 441-465, June.
  9. Montes, Leonidas, 2003. "Das Adam Smith Problem: Its Origins, the Stages of the Current Debate, and One Implication for Our Understanding of Sympathy," Journal of the History of Economic Thought, Cambridge University Press, vol. 25(01), pages 63-90, March.
  10. Bromley, Daniel W., 1990. "The ideology of efficiency: Searching for a theory of policy analysis," Journal of Environmental Economics and Management, Elsevier, vol. 19(1), pages 86-107, July.
  11. Bhide, Amar, 2010. "A Call for Judgment: Sensible Finance for a Dynamic Economy," OUP Catalogue, Oxford University Press, number 9780199756070.
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Cited by:
  1. Avner Offer, 2012. "A Warrant for Pain: Caveat Emptor vs. the Duty of Care in American Medicine, c. 1970-2010," Economics Series Working Papers Number 102, University of Oxford, Department of Economics.
  2. Aled Davies, 2012. "The Evolution of British Monetarism: 1968-1979," Oxford University Economic and Social History Series _104, Economics Group, Nuffield College, University of Oxford.
  3. Aled Davies, 2012. "The Evolution of British Monetarism: 1968-1979," Economics Series Working Papers Number 104, University of Oxford, Department of Economics.

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