Economic Thought 1 (2) (2012)

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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References found in this work BETA

The Theory of Moral Sentiments.Adam Smith - 1759 - Dover Publications.
Capitalism and Freedom.Milton Friedman - 1962 - Ethics 74 (1):70-72.
The Nature and Scope of Rational-Choice Explanations.Jon Elster - 1985 - In Ernest LePore & Brian P. McLaughlin (eds.). Blackwell. pp. 60-72.

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