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Comment by bduerst | Hacker News Reader

Kind of disappointing. They go on explaining the agency effect side of capitalism's double-edged sword, but never really give any alternatives or solutions.

Sure, certain economic behavior, that may not align with the good of society, becomes necessary to survive in a given industry or market - but how would they recommend fixing this? Surely they aren't suggesting that their students throw away rationally beneficial opportunities?

I was hoping by the end of the article they would propose something.

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Surely they aren't suggesting that their students throw away rationally beneficial opportunities?

They probably should, this is somewhat at the heart of the problem. Economic theory suggest that you will act in the best interest of society if you act in best interest of yourself. But this is obviously not true, there is nothing that justifies the assumption that maximizing your gains will simultaneously maximize gains for society. Quite the opposite is true - improving your gains a tiny bit will often decrease gains for the society as a whole by a disproportional amount.

Economic theory suggest that you will act in the best interest for society if you act in best interest for yourself.

There are many economic theories, but I don't know any that asserts that in such a general way.

Right, I was referring mostly to capitalism as we see it in the real world, not economic theories in general. The idea goes back all the way to Adam Smith. And you are of course also correct that if you look closely at what people have said you will not find such a generic assertion because it is so obviously wrong that nobody would dare to assert it. But then look at reality. People cherry-pick the bits and pieces that make their actions look good and ignore the rest.

> The idea goes back all the way to Adam Smith.

Adam Smith argued that landlords (those living off land rents) had interests aligned with the common good, as did wage laborers, but that capitalists in general had interests divergent from and often opposed to the common good of society. (See, An Inquiry into the Nature and Causes of The Wealth of Nations, Book I, Chapter 11.)

That is why I said if you look closely you will not find such generic assertions. Another example is that Adam Smith realized how much efficiency can by gained by division of labor but he also said that this leads to inhuman labor conditions and should be avoided. But what is our reality? We pick the efficiency gain and ignore the negative effects as long as we can. If workers start complaining we do the bare minimum, rotate them through a couple of different tasks, but that is obviously far from trying to avoid division of labor as much as possible.

The workers, by complaining, are also acting in their best interest. As you see, sometimes that can also be good for society.

I am definitely not arguing that self-interests and the interests of society can not be aligned, I am only arguing that they do so much more rarely than people like to pretend.

you will not find such a generic assertion because it is so obviously wrong that nobody would dare to assert it.

Or because nobody actually believes it. Even the more staunch laissez-faire defender believes some self-beneficial acts to be contrary to the common welfare, like stealing or getting reelected after promoting anti-market policies.

Likewise, anti-capitalists argue that many self-beneficial actions are also beneficial to society, like demanding to be paid fair wage or even taking control of their means of production. "Workers, unite!" is not a call for self-sacrifice.

People cherry-pick the bits and pieces that make their actions look good and ignore the rest.

Sure, but that's not an economic theory.

You are of course correct, I should not have written economic theories when I really mean real-world economics. And I of course neither doubt that self-interests can be aligned with the interests of society nor that people realize that self-interests are not necessarily aligned with the interests of society.

But when you look at the real world rational actors is often not much more than an euphemism for greedy actors. Exceptions not withstanding. While real-world capitalism without doubt enabled an enormous gain of total wealth that is hard to imagine in more fair - or whatever you want to call it - economic systems I see no way that you could argue that it was the best option at least for the last couple of decades or that we should or even could go on in the same way.

But the thing is: few people argue for the current system. If you want to find agreement with the statement "this system is deeply flawed", you can almost look anywhere (and certainly at the laissez-faire economists).

An example: http://www.amazon.com/The-Great-Deformation-Corruption-Capit...

What you won't find is agreement over what exactly is wrong with the current system, what exactly causes those problems, and what to do about setting to solve them.

>But this is obviously not true, there is nothing that justifies the assumption that maximizing your gains will simultaneously maximize gains for society.

That's not clear to me at all. If society gets wealthier as people pursue their own interests there's more money to devote to things like cancer research.

That isn't the case if the way you're becoming wealthier is by frontrunning by a few milliseconds. By doing so you're effectively leeching off other participants in the stock market, including large institutional funds (like universities, which spend on basic science research).

Sometimes people get wealthy because they help create value. Sometimes they get wealthy because they're leeches. So maximizing your gains clearly doesn't always maximize gains for society.

>_If society gets wealthier_ as people pursue their own interests there's more money to devote to things like cancer research.

The if is the crux. That money in very few countries find itself back into public good, in recent years.

> Economic theory suggest that you will act in the best interest of society if you act in best interest of yourself.

Which economic theory are you referring to?

https://news.ycombinator.com/item?id=9357713

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