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