Public Interest and Self-Interest in the Market and the Democratic Process
Studies in Economic Ethics and Philosophy
The idea of public interest has been criticized by economic theory as being naïve in its believe that politicians could anticipate something like the public interest. Public Choice theory has shown that politicians are as self-interested as other acting persons. The paper examines this criticism. It points to the fact that also what is in our self-interest in the long run is difficult to know and to anticipate. The relationship between public and private interest is therefore more complicated
... an the pure theory of the invisible hand assumes. The paper also examines how public interest and private interests interact in the firm. The common good is not only a political but also a managerial concept. The management is not only obliged to fulfill its fiduciary duty towards the shareholders or owners and to act in their interest but must also realize the common good of the firm as the good of all members of the firm. There is an analogy between the politician and the manager: both cannot only work in the interest of their party or employers. To work for the common good is part of their office, part of the nature of their task of good governance in the interest of those concerned by their decisions. Realizing public interest is usually seen as the task of the state and as an obligation for politicians, not for the managers of large corporations. Public interest is a concept that is used constantly, that is made concrete rarely and that is viewed as an empty concept more and more often. It seems to be a difficult obligation to work for the common good and to consider the effects of one's own action for the public good in a market society in which every one has a right to follow his or her self-interest. Nevertheless the concept of public interest is indispensable, particularly indispensable for politics. The right of a politician to follow his or her private interest and that of her immediate clients in her office is defended by no one. The role description of the politician incorporates that he or she works for the public good in her action and not for her party's good. The demand for public interest is here no empty concept but something like a general clause that applies to all actions of politicians. Politicians can consider their self-interest and strive for fame, prestige and career as a side effect of their intention to realize the public good, but they cannot view the common good as the side effect of the realization of their self-interest. In a market society, the reverse causation is effective it is often said. The shareholder and the manager of a corporation realize the common good of public efficiency as a side effect of the pursuit of their self-interest and profit so that in a market society the demand to realize the common good does not hold.