Lecture 1 Ethics
Is Smith’s capitialism about economics or morality
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| Is Smith’s capitialism about economics or morality Prudential vs moral (actions benefit personally vs actions taken in accord with some moral rule) Economic vs moral (actions taken to promote wealth and income vs actions to promote higher considerations) What makes Smith’s approach amoral one Every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it…he intends only his own security [benefit]; and by directing that industry in such a manner as its produce maybe of the greatest value, he intends only his own gain and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. When you are working you are not trying to figure out how much you are trying to contribute to gdp; simply work to benefit yourself. We are busy trying to personally optimize. Not focusing on how society will benefit from our behaviour. His own security → his own financial security Led by invisible hand → never intended to increase gdp, but you are nonetheless. The market pricing mechanism (the interaction between d & s to set a market clearing price. Directing resources through society. If there is a shortage, the pricing mechanism will fix it. You are thinking about your own self interest (increasing profits by increasing prices) but you are also increasing the market By pursing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it → you do the best for society when you just focus on your own best self interest The individual entrepreneur is not trying to make society better → it’s about self-interest, not public good. Promote yourself interest and the invisible hand will turn your self-interest into public interest. If market is full, then it will stop you from entering. Through exchanges, the market makes everyone better off. This is the higher good capitalism appeals to. Therefore, morality is all about protecting the market and enabling it to do best the good that it can do. Download 0.65 Mb. Share with your friends:
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