 Invisible Hand and Manipulative HandToshio Yamada ()
Chapter Chapter 5 in Civil Society and Social Science in Yoshihiko Uchida, 2022, pp 95-109 from Springer Abstract: Abstract Adam Smith declared that the pursuit of self-interest leads to wealth in the society as a whole, through the “invisible hand” of the market, which, in turn, increases the efficiency of the economy and maximizes social utility.—Based on such an understanding of Smith, the neoliberal economics argued that all areas of social life must be marketed, and in fact, has globalized the market and allowed financiers to pursue their greedy interests, resulting in the global financial crisis of 2008 and rising class inequality (Sect. 5.1). However, did Smith really accept the selfish activities of selfish individuals as they were? The study of Smith by Yoshihiko Uchida gives a great suggestion to the above question. According to Uchida, the self-interest that Smith affirmed was that of the middle and lower classes in a society, who aimed for modest improvements in their own circumstances by adhering to fair and equivalent market exchange and by gaining the sympathy of “impartial spectators.” Smithian self-interest is a self-interest formed among individuals who mutually recognize that the other person is also a selfish person, and in this sense, it is a “self-interest regulated by sympathy.” This means that self-interest and sympathy are inseparable, and the “invisible hand” is effective only when these two are complementary (Sects. 5.2 and 5.3). Since the latter half of the twentieth century, with increasing marketization of social life, not only physical goods but also human body parts and human relationships have become objects of sale. Material and financial incentives are offered by dominant authorities and leading corporations to guide people toward a specific goal. These “incentives” become the “manipulative hand,” pushing people towards a goal intended by the provider. In other words, they use money to catch people; this transforms the “invisible hand” into a “manipulative hand.” However, incentive-driven marketization leads to “moral corruption” by crowding out the original norms that are appropriate for dealing with certain things. This is argued by Michael Sandel (Sect. 5.4). As has already been suggested, “self-interest and sympathy” and “incentives and morality” are not independent of each other but have a strong mutually prescriptive relationship. This fact was underpinned by Samuel Bowles’s critical examination of contemporary social science in light of the “inseparability of incentives and morality.” According to him, in modern capitalism, “incomplete contracts” (contracts in which prices cannot be set in advance for all the details of objects to be bought and sold) have expanded in the markets of labor, credit, information, knowledge, medicine, care, etc. It is not possible to adjust everything with price. The trust and morality of the citizens become important to form contracts and to enable smooth operation of an economic society (Sects. 5.5 and 5.6). In this way, both Uchida and Bowles criticize the economics based only on self-interest, which exiles ethics out of economics, and seek economics that recognizes the inseparability of self-interest and morality, or the complementarity of market and civil society (Sect. 5.7). Date: 2022 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-19-1138-5_5 Ordering information: This item can be ordered from DOI: 10.1007/978-981-19-1138-5_5 Access Statistics for this chapter More chapters in Springer Books from Springer |
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