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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, public 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. 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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  • Avner Offer, 2012. "Self-interest, Sympathy and the Invisible Hand: From Adam Smith to Market Liberalism," Oxford Economic and Social History Working Papers _101, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:esohwp:_101
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    Cited by:

    1. Avner Offer, 2013. "Narrow Banking, Real Estate, and Financial Stability in the UK, c.1870-2010," Oxford Economic and Social History Working Papers _116, 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. Flavia Di Mario & Andrea Micocci, 2017. "Smith’s invisible hand: controversy is needed," The Journal of Philosophical Economics, Bucharest Academy of Economic Studies, The Journal of Philosophical Economics, vol. 11(1), pages 53-82, November.
    4. Robert C. Allen, 2015. "The high wage economy and the industrial revolution: a restatement," Economic History Review, Economic History Society, vol. 68(1), pages 1-22, February.
    5. Avner Offer, 2013. "Narrow banking, real estate, and financial stability in the UK, c.1870-2010," Oxford University Economic and Social History Series _116, Economics Group, Nuffield College, University of Oxford.
    6. Aled Davies, 2012. "The Evolution of British Monetarism: 1968-1979," Oxford Economic and Social History Working Papers _104, University of Oxford, Department of Economics.
    7. Avner Offer, 2012. "A Warrant for Pain: Caveat Emptor vs. the Duty of Care in American Medicine, c. 1970-2010," Oxford University Economic and Social History Series _102, Economics Group, Nuffield College, University of Oxford.
    8. Robert C. Allen, 2015. "The high wage economy and the industrial revolution: a restatement," Economic History Review, Economic History Society, vol. 68(1), pages 1-22, February.
    9. Avner Offer, 2012. "A Warrant for Pain: Caveat Emptor vs. the Duty of Care in American Medicine, c. 1970-2010," Oxford Economic and Social History Working Papers _102, University of Oxford, Department of Economics.

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