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Neues Diskussionspapier von Viktor Vanberg

Adam Smith’s ([1776] 1981: 26f.) well-known phrase that “it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest” was, contrary to popular interpretation, not meant to praise individuals’ self-interest but to point to the virtues of competition. It is the competition for customers that guides the self-interest of butchers, brewers and bakers into the beneficial direction Smith describes. Absent the constraints of competition their self-interest could scarcely be counted on to take care of our needs. Since Adam Smith’s Inquiry the notion that competition is the principal instrument for directing producers’ interests into serving consumers’ interests has been at the core of economists’ theory of the market.