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Self‐Interest vs. Greed and the Limitations of the Invisible Hand
Author(s) -
Clements Matthew T.
Publication year - 2013
Publication title -
american journal of economics and sociology
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.199
H-Index - 38
eISSN - 1536-7150
pISSN - 0002-9246
DOI - 10.1111/ajes.12026
Subject(s) - law and economics , function (biology) , norm (philosophy) , economics , business , social function , microeconomics , law , political science , sociology , biology , social science , evolutionary biology
Markets can only function well if there is an appropriate legal framework to restrict the behavior of market participants; however, the legal framework is inevitably inadequate. A “greedy” market participant that seeks to gain at the expense of others can usually find some way to do so. This might be done within the legal framework, or it might involve a violation of the law that is difficult to enforce. Since the legal system does not generally guarantee that markets can function efficiently, there is a role for other institutions to foster a more enlightened self‐interest as a social norm and thus improve efficiency.