Self-Interest: The Economist’s Straitjacket
44 Pages Posted: 14 Oct 2015 Last revised: 3 Feb 2019
Date Written: January 31, 2017
This paper examines contemporary economic theories that focus on the design and management of business organizations. In the first part of the paper, a taxonomy is presented that describes the different types of economists interested in this subject — market economists, regulatory economists, macro economists, and enlightened economists — and illustrates the extent to which each tribe has been captured by the concept of self-interest. After arguing that this fixation has caused — and is likely to continue to cause — significant harm to our economy, the paper then presents an alternative approach based on a theory of business and discusses the implications for research and public policy.
Keywords: self-interest, economists, moral philosophers, agency theory, regulation, capture, organization design, economic theory, organization theory, management theory, business education, competition, customers, commitment, controls, boundaries
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