Unintended Consequences Matter

I linked to Aaron McKenzie’s disentanglement of self-interest and greed here.

In this post, Arnold Kling recommends reading an essay called Capitalism and the Jewish Intellectuals.  In it, he writes, the authors believe intellectuals are hostile to capitalism because of this entanglement of self-interest and greed.  They interpret “incentives matter” as “greed drives capitalism.”

So, they recommend a way to get intellectuals over that hump.  Kling poses their recommendation in the form of a Q&A:

Q: How would you break down that hostility to capitalism?

A: By de-emphasizing “Incentives matter” and instead emphasizing that “unintended consequences matter.” That is the message of Adam Smith. It is the message of Hayek. Once we embed people in complex economic and political systems, selfish intentions can turn out well (because of competition), and good intentions can turn out badly (because of imperfect knowledge).

Though, based on Aaron’s advice, I would reword part of the answer to:

…self-interested intentions can turn out well (because of competition)

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3 thoughts on “Unintended Consequences Matter

  1. Inre: breaking down the hostility to (or at least explaining) capitalism:

    I wholeheartedly agree with the Friedmans’ suggestion that we emphasize unintended consequences. I also appreciated Sheldon Richman’srecent piece in The Freeman (link below), which he opened by asking: “Would the free-market movement be perceived differently if its dominant theme was social cooperation rather than (rugged) individualism, self-reliance, independence, and other synonyms we’re so fond of?” That is, does it help if we emphasize the difference between free and forced cooperation?

    http://www.thefreemanonline.org/columns/tgif/social-cooperation/

    (Thanks again for the links, by the way.)

    • It makes sense. Much of what they believe is based on identify and ‘good intentions’ marketing.

      Now that I think about, I do often take this approach. I think many of us do. “What if your policies hurt the very people you want to help?” And, when I think about it, that’s exactly what knocked me out-of-the-box when I was liberal. It was never immediate, but when my friends pointed out the unintended consequences, I was more likely to notice those later and give it some thought. I think patience is another key.

      My pleasure on the links. Good stuff. Thanks for the link to Richman’s arcticle.

  2. Pingback: RetailWire Discussion: RSR Research: Workforce Optimization and Unintended Consequences    « Meyers Research Center: THE BLOG

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