Adam Smith's Lost Legacy: Self Interest and Selfishness
The merchants above were activated by their risk avoidance; they didn't need an invisible hand to lead them to avert avoid adding to their risks. Smith used the metaphor as a literary device, not as an instrument of social behaviour.
The belief that there were invisible hands ensuring that thereby anything done by corporate bodies benefits society was "more like propaganda against communism than plausible science" is half right, though 'communism' was not the target; it was more positive than that. It was propaganda, alright, but not just by corporate-minded economists in favour of their clients being given a free hand to do whatever they wanted; it was also, and mainly, an attempt by mainstream economists to legitimise their mathematical models of general equilibrium. …
Self-interest is not selfishness. When I look both ways before crossing the street, eat three meals a day, and exercise thirty minutes, I'm exercising self-interest. Jesus repeatedly appeals to our self-interest with instructions like those where he tells us to store up treasure for ourselves in heaven rather than on earth. Selfishness is when we place our wants and needs above all else. Self-interest is not selfishness, but blurring can make discernment difficult.
Markets, where virtuous people pursue self-interest, do not result in perfect efficiency or fairness, but they do remarkably well at this compared to other alternatives humanity has yet seen. Thus, merely identifying that markets are imperfect is insufficient justification for heavy intervention. The law of unintended consequences is an ever-recurring theme. Thus, overconfidence in either markets or government control is risky. Prudence is the key.
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