Public Interest and Self-Interest in the Market and the Democratic Process

The idea of public interest has been criticized by economic theory as being naïve in its believe that politicians could anticipate something like the public interest. Public Choice theory has shown that politicians are as self-interested as other acting persons. The paper examines this criticism. It points to the fact that also what is in our self-interest in the long run is difficult to know and to anticipate. The relationship between public and private interest is therefore more complicated than the pure theory of the invisible hand assumes. The paper also examines how public interest and private interests interact in the firm. The common good is not only a political but also a managerial concept. The management is not only obliged to fulfill its fiduciary duty towards the shareholders or owners and to act in their interest but must also realize the common good of the firm as the good of all members of the firm. There is an analogy between the politician and the manager: both cannot only work in the interest of their party or employers. To work for the common good is part of their office, part of the nature of their task of good governance in the interest of those concerned by their decisions.