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Saturday, May 18, 2013

New Research in Economics: Self-interest vs. Greed and the Limitations of the Invisible Hand

This is from Matt Clements, Associate Professor and Chair of the Economics Department at St. Edward’s University:

Dear Professor Thoma,
Allow me to add to the flood of responses you have no doubt received to your offer to help publicize your readers’ research. The paper is called "Self-interest vs. Greed and the Limitations of the Invisible Hand," forthcoming in the American Journal of Economics and Sociology (pdf of the final version). The point of the paper is that greed, as opposed to enlightened self-interest, can be destructive. Markets always operate within some framework of laws and enforcement, and the claim that greed is good implicitly assumes that the legal framework is essentially perfect. To the extent that laws are suboptimal and enforcement is imperfect, greed can easily enrich some market participants at the expense of total surplus. All of this seemed sufficiently obvious to me that at first I wondered if the paper was even worth writing, but the referees were surprisingly difficult to convince.

    Posted by on Saturday, May 18, 2013 at 11:28 AM in Academic Papers, Economics | Permalink  Comments (13)


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