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ISLAMABAD, Jan 21 (APP):Experts at a seminar revisited ideas presented by renowned economist Adam Smith in light of contemporary economic challenges, questioning the widespread belief that markets automatically align private incentives with social welfare.
The seminar titled “Whose Interest? Conflicts with the Invisible Hand” was organized by The Pakistan Institute of Development Economics (PIDE), in collaboration with PRIME, to mark the 250th anniversary of The Wealth of Nations by Adam Smith.
Professor of Economics at Trinity University, Maria Pia Paganelli in her whose presentation challenged the modern conflation of Smith’s concept of “own interest” with narrow self-interest.
She explained that Smith’s invisible hand operates only when individuals pursue their goals while considering others’ interests. When interest turns into self-interest, pursued at the expense of others, the invisible hand fails to deliver socially beneficial outcomes.
Prof. Paganelli identified conditions under which self-interest comes into direct conflict with the interests of society including sharp differences in bargaining power; unequal understanding of interests across social groups.
Prof. Paganelli highlighted asymmetries in access to institutional and state power adding Smith observed that merchants and manufacturers, concentrated in towns, were able to collude and extract favorable legislation, securing monopolies and privileges that oppressed consumers and workers alike. Prof. Paganelli emphasized Smith’s unusually strong language on this point, noting his description of such groups as deceiving, oppressing, and extorting the public through the legislature.
The session was moderated by Omer Siddique, Senior Research Economist at PIDE, who steered the discussion toward present-day policy implications.