« Bad market reporting again | Main | Neil Young, the moon and stock markets »

October 30, 2005



I think the reasons you give are very plausible and interesting. I've certainly taken the view for some time that people who come at political questions from backgrounds in modern economics have a strong tendency towards just assuming that social interactions can essentially follow the same rules as economic interactions. That because the best economies are those with the least intervention, the best societies will likewise be those in which traditional morality and government pressure do not have much bearing on individual autonomy.

But the model of the free marketplace is not a good basis for judging the rights and wrongs of all other areas. Adam Smith showed how economic transactions can be mutually and generally beneficial even if one is only pursuing one's own self-interest, and that is the right way to look at the rules of an economy. But there is no equivalent mechanism to the 'invisible hand' in social interactions. If people use self-interest to guide their economic transactions, that can mean a prosperous and thriving economy that is generally beneficial. But if they use self-interest as their sole guide when it comes to the question of their duty to others, such as the woman they promised to stay with through thick and thin, and the children that relationship has produced, society is certainly *not* going to be thriving or generally very pleasant. That's why some social, moral or legal barriers are needed to be weighed against individual self-interest in such matters.


Peter, read The Theory of Moral Sentiments.


Thanks - I do indeed plan to. Why do you suggest it in this context, may I ask? Are you saying Adam Smith *did* discover a social equivalent of the economic hidden hand, that ensures unrestrained self-interest promotes the social good the way it can promote the economic good?


To my knowledge, Smith made a distinction between market value and moral value indicating that individual self interested behaviour was socially beneficial in a transactional context, but not when it came to social interactions. The marginalists conveniently glossed over Smith's distinction a century later when neoclassical 'economics as we know it' began to cohere. Self interest therefore became the principle dogma of the dismal science.

As a feminist, I have a (some!) problem(s) with the economics/self-interest(freedom) nexus. Firstly, as economics is the study of the gains from trade, like you say Chris, then in this respect we can legitimately think of it as the study (science?) of choice under conditions of constraint. A precondition of choice is, of course, freedom. Human liberties are defined against a male behavioural norm; women are not free to choose in the same way as men because their behaviour is curtailed by institutionally regulated gender roles, such as motherhood and marginality in the labour market. Men's choices are affected too but not in the same way.

I also think that the assumed venality of human nature is a masculinist construct. If we consider the core values of libertarian economics as individualism, detachment and self interest then consider the 'flip-side' of these concepts; interventionism, affiliation and concern for others, the gender associations are obvious. Economics is men studying the behaviour of men. In a very masculine way!

And to throw an institutionalist perspective into the mix - could it be true that the way we construct economic decision making (individual process, individual gains) actually influences people into *becoming* more individualist? Maybe? :)

The comments to this entry are closed.

blogs I like

Why S&M?

Blog powered by Typepad