By Lucas Weingarten
In my previous post, I answered a question which I had posed in the post before it (Invisible Hand Pt. 1 and Sustainability?) Perhaps it’s best to take a moment to read those posts. After all, that could help what comes below make a bit more sense. Or, just jump on the train now; you’ll catch up quickly.
Anyway, let me show you the rest of the quote from Adam Smith in Book IV Chapter II of “The Wealth of Nations”:
“… [He] is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”
Read that last line again. At first blush, one might assume that Smith is espousing the position that a free and unregulated market will always serve to the interests and betterment of society—a sort of de facto relationship between acting in individual self-interest and the (unintended and unforeseen) byproducts that come from those actions. [Enter Invisible Hand, stage right.] However, Smith uses the word “frequently” not “always” when discussing the promotion of social benefit through self-interest. What often happens, and what has happened with our economies and our environment, is “The Tragedy of the Commons.”
~Article provided by the courtesy of Kaplan GMAT
