Chapter 6: Beyond The Invisible Hand: Self-Interest, Profit Maximization, and the Social Good

Self-interest stands in complex, tangled relation to the good and the right, and nowhere is this more evident than in the world of business. In this essay, I probe some of the complicated links between pursuing profit, on the one hand, and doing good and acting rightly, on the other. There would be few complications to probe if the pursuit of profit were guaranteed to enhance the well-being of all as the invisible-hand doctrine proclaims. Accordingly, the first two sections of this essay examine that doctrine and discuss its economic and ethical limitations. However, even when they have abandoned the invisible-hand doctrine and the narrow view of corporate social responsibility that typically accompanies it, many economists and business theorists still believe that we cannot reasonably expect corporations to act other than in self-interested, profit-seeking ways. The final sections of the paper rebut this idea by inspecting the fiduciary responsibilities of management, the public’s expectations of corporations, and the elusiveness of profit maximization. Doing so illustrates the sometimes subtle interconnections between self-interest and right action and supports the contention that corporations, and the people in them, have moral obligations that go beyond self-interest and maximizing profit.