The Link between Self‐ and Societal Interests in Theory and Practice

Abstract

This paper explores the relationship between self‐ and societal interests and addresses the problem of irresponsible profit generation in practice. By contrasting the neo‐classical assumptions about the role of self‐interest in promoting societal interests with empirical evidence, the paper elaborates on the following point: self‐ and societal interests are not at odds but they do not automatically coincide in reality because markets are never perfect. Thus, the problem of the pursuit of self‐interest at the expense of others cannot simply be solved by creating more markets. In this paper, it is argued that the danger of irresponsible realization of profits becomes more significant with increasing focus on short‐term goals. Accordingly, the paper pleads for the promotion of long‐term orientation in markets as a means of bringing self‐ and societal interests closer together.

Keywords: business and society, irresponsible behavior, neo‐classical theory, profit maximization, self‐interest, social welfare