Self-interest, Sympathy and the Invisible Hand: From Adam Smith to Market Liberalism
AbstractAdam 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 by not by sympathy for other people, but by their approbation. Approbation needs to be authenticated, and in Smith’s model authentication relies on innate virtue, which is unrealistic. An alternative model of ‘regard’ is applied, which 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 inconsistent with Adam Smith’s own position.
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Bibliographic InfoPaper provided by Economics Group, Nuffield College, University of Oxford in its series Oxford University Economic and Social History Series with number _101.
Length: 30 pages
Date of creation: 01 Aug 2012
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-22 (All new papers)
- NEP-HIS-2012-09-22 (Business, Economic & Financial History)
- NEP-HME-2012-09-22 (Heterodox Microeconomics)
- NEP-HPE-2012-09-22 (History & Philosophy of Economics)
- NEP-PKE-2012-09-22 (Post Keynesian Economics)
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