Regulating Markets

Abstract

Markets have been characterised as mechanisms which harness the pursuit of private gain to social ends. This idea of the market as an ‘invisible hand’ reconciling individual self-seeking with the social good is encapsulated in one of the most famous quotations in the history of economic ideas:

It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner but from their regard for their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. (Smith, 1776, p. 119)