Template-type: ReDIF-Paper 1.0
Author-Name: Avner Offer
Author-Workplace-Name: All Souls College, University of Oxford
Author-Email: avner.offer@all-souls.ox.ac.uk
Title: Self-interest, Sympathy and the Invisible Hand: From Adam Smith to Market Liberalism
Abstract: Adam Smith rejected Mandeville’s invisible-hand doctrine of ‘private vices, publick benefits’. 
In The Theory of Moral Sentiments his model of the ‘impartial spectator’ is driven by not by sympathy for
other people, but by their approbation. Approbation needs to be authenticated, and in Smith’s model 
authentication relies on innate virtue, which is unrealistic. An alternative model of ‘regard’ is 
applied, which makes use of signalling and is more pragmatic. Modern versions of the invisible hand in 
rational choice theory and neo-liberalism are shown to be radical departures from the ethical legacy of 
Enlightenment and utilitarian economics, and are inconsistent with Adam Smith’s own position.
X-Classification-JEL: 
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Length: 30 pages
Creation-Date: 2012-08-01
Number: _101
File-URL: http://www.economics.ox.ac.uk/materials/papers/12257/offer101.pdf
File-Format: application/pdf
Handle: RePEc:nuf:esohwp:_101