Self-Interest vs. Greed and the Limitations of the Invisible Hand

American Journal of Economics and Sociology, Forthcoming

24 Pages Posted: 4 Feb 2011 Last revised: 2 Jun 2012

Date Written: September 30, 2011

Abstract

Markets can only function well if there is an appropriate legal framework to restrict the behavior of market participants; however, the legal framework is inevitably inadequate. A “greedy” market participant that seeks to gain at the expense of others can usually find some way to do so. This might be done within the legal framework, or it might involve a violation of the law that is difficult to enforce. Since the legal system does not generally guarantee that markets can function efficiently, there is a role for other institutions to foster a more enlightened self-interest as a social norm and thus improve efficiency.

Keywords: Efficiency, Ethics, Regulation

JEL Classification: B52, K20, Z13

Suggested Citation

Clements, Matthew T., Self-Interest vs. Greed and the Limitations of the Invisible Hand (September 30, 2011). American Journal of Economics and Sociology, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1754537 or http://dx.doi.org/10.2139/ssrn.1754537

Matthew T. Clements (Contact Author)

St. Edward's University ( email )

3001 South Congress Avenue
Austin, TX 78704
United States
(512) 428-1321 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
197
Abstract Views
1,371
rank
155,118
PlumX Metrics