The paper points out that Adam Smith’s famous argument about the “invisible hand” (IH) of markets can be inverted. While the IH argument suggests that the baker and butcher do what is in their costumers’ interests not because they care for their costumers, but out of their own self-interest, one can also defend the converse claim: if one cares for other people and finds a way to satisfy their needs, one can expect that those others will be willing to pay (...) for the satisfaction of their needs. The paper argues that the IH argument has a strong link to the view that the ultimate goal of management should be “profit maximization” and to neo-liberalism’s tenet that in a market economy where companies attempt to maximize profits, a “socially optimal” allocation will be achieved. It is argued, however, that profit maximization is well-defined only within a mathematical model, while real-world decision-making requires one to choose the “relevant set” of options before any assessment of associated profits can be attempted. “Profit maximization” is therefore characterized as a heuristic for managerial decision-making, and it is pointed out that it is by no means essential for management to be successful and sustainable. The inverse IH argument supports natural alternatives, such as Prahalad and Hart’s “bottom-of-the-pyramid” and Yunus’s “social entrepreneurship” approach. Both require the manager to focus on people’s needs first, and regard the “money-making” aspect as secondary. (shrink)

It is a commonplace that the writers of eighteenth century Scotland played a key role in shaping the early practice of social science. This paper examines how this ‘Scottish’ contribution to the Enlightenment generation of social science was shaped by the fascination with unintended consequences. From Adam Smith's invisible hand to Hume's analysis of convention, through Ferguson's sociology, and Millar's discussion of rank, by way of Robertson's View of Progress, the concept of unintended consequences pervades the writing of the period. (...) The paper argues that the idea of unintended order shapes the understanding of the purpose of theoretical social science that emerges from the Scottish Enlightenment. (shrink)

In the year 1749 Adam Smith conceived his theory of commercial liberty and David Hume laid the foundation of his monetary theory. These two intellectual developments, despite their brevity, heralded a paradigm shift in economic thinking. Smith expanded and promulgated his theory over the course of his scholarly career, culminating in the publication of The Wealth of Nations in 1776. Hume elaborated on the constituents of his monetary framework in several essays that were published in 1752. Although Smith and Hume (...) devised their economic theories in 1749 independently, these theories complemented each other and to a considerable extent created the structure of classical economics. (shrink)

This article revisits the "harmony doctrine" school of economics and its distinctive understanding of how ethics and economics intersect. Harmony doctrine thinkers staked out a “natural” understanding of economic phenomena that in many ways fused the classical political economy of Adam Smith with the earlier French Physiocratic School. Their metaphysically grounded interpretation was largely eclipsed by the developments of utilitarian and marginalist schools by the end of the nineteenth century. Yet harmony doctrine thinking adhered to a distinct understanding of how (...) ethical processes and outcomes play out within the economic sphere that has to date gone under examined by business ethicists. This paper outlines three characteristics of harmony doctrine views: the belief in curative forces empowered to "heal" the economic order, a dichotomous interpretation of the economic realm that distinguishes the “natural” from the “artificial,” and an overarching belief in a harmonious social order actualized by cooperative interdependencies within economic enterprises. Despite falling into obscurity in the economic discipline, all these ideas found new life in intellectual currents of organizational and political thought at the turn of the twentieth century. After surveying these historical developments, this article concludes by demonstrating how harmony doctrine thinking helpfully illuminates persisting metaphysical dimensions of contemporary business ethics. (shrink)

Chapter. 1. Philosophical. Perspectives. on. Democracy. in. the. Twenty-First. Century: Introduction. Ann E. Cudd and Sally J. Scholz Abstract Recent global movements, including the Arab Spring, the Occupy Movement, as well as polarizing ...

This is a comprehensive anthology of works concerning the nature of economics as a science, including classic texts and essays exploring specific branches and schools of economics. Apart from the classics, most of the selections in the third edition are new, as are the introduction and bibliography. No other anthology spans the whole field and offers a comprehensive introduction to questions about economic methodology.

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. (shrink)

Adam Smith, in Wealth of Nations, used gravitation as a rhetorical metaphor and not in a formal philosophical sense, as used by Newton, Aristotle or Empedocles. Physical gravitational attraction is predictable, accurate and rule-bound; metaphoric gravity, as in relationships between natural and market prices, are neither strictly rule-based nor predictable. Market exchange relationships between independent people are subject to the vagaries of imperfect rhetorical persuasion....