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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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  • Avner Offer, 2012. "Self-interest, Sympathy and the Invisible Hand : From Adam Smith to Market Liberalism," Economic Thought, World Economics Association, vol. 1(2), pages 1-1, December.
    • Handle: RePEc:wea:econth:v:1:y:2012:i:2:p:1
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    References listed on IDEAS

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    1. 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, August.
    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. 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.
    4. 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.
    5. 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.
    6. 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.
    7. Avner Offer, 2006. "The challenge of affluence: self-control and well-being since 1950," Working Papers 6020, Economic History Society.
    8. Colin F. Camerer & Ernst Fehr, "undated". "Measuring Social Norms and Preferences using Experimental Games: A Guide for Social Scientists," IEW - Working Papers 097, Institute for Empirical Research in Economics - University of Zurich.
    9. Samuels,Warren J. Assisted by-Name:Johnson,Marianne F. Assisted by-Name:Perry,William H., 2014. "Erasing the Invisible Hand," Cambridge Books, Cambridge University Press, number 9781107613164, January.
    10. 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.
    11. Bhide, Amar, 2010. "A Call for Judgment: Sensible Finance for a Dynamic Economy," OUP Catalogue, Oxford University Press, number 9780199756070, Decembrie.
    12. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 11-32.
    13. 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(1), pages 63-90, March.
    14. 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, Decembrie.
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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. Aled Davies, 2012. "The Evolution of British Monetarism: 1968-1979," Oxford Economic and Social History Working Papers _104, University of Oxford, Department of Economics.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    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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