For the last decade, various aspects in the business world have led to many an answered question. What are the public and the market interests in the commerce fraternity? The question is one of the issues that still have some serious debates and has created various presumptions among people venturing in business. According to researchers, the study of economics is not always in acquiring a ready-made answer to an economic question, but to have the exposure and learn how to avoid being cheated or deceived by economists. Market Self-interest probably means that the market can seek its personal gain without affecting its relationship with the public interest. For one to ensure the submission of the right answers to either students or entrepreneurs, there are articles on the theory of economy.
In a market economy, a market always considers its self-interest for sustainability in a competitive world. Markets tend to adopt new strategies for survival by exploring and venturing where they can gain more profit and race against competitions. According to Gregory and Smith (2013), economic activities across the globe are the result of selfish interests. Arguing with a basic example, so why to bakers in the baking industries choose to bake? Automatically the correct answer is self-absorption. The Baker is not after pleasing anyone or competing; rather he wants enough money to sustain his family. This example also implies on the marketplace, where businesses are not after anything else but to have the fair share for sustenance purposes. Gregory and Smith (2013) also argue that self-regard is the motivator of all economic activities. Cheating, dishonesty, and gouging are all led by self-interest; luckily enough, the completion aspect in the commerce field always play an influential role by holding it in check. Still giving an example with the baker, it is a basic concept that the only way a baker can earn dollars in a day is by producing high-quality products that are cheaper and more convenient than the competitors. If he decides on increasing the price too much, the customers or the consumers will likely buy the products from his competitors; Facing a risk in making losses. The argument brings to a conclusion that, if a business lacks real competitors and stands in a position of monopoly, it can easily charge high prices, sell some inferior products or treat customers poorly. In the case of the others, a self-interested person or a business might have the chance to see an opportunity in earning enough money and making profits; thus opening a competing job that can easily result and lead to the failure of the primary job. Notably, this shows how rivalry goes about as a decent keep an eye on self-interests as it controls the capacity of one business to take the full favorable position of the clients. Besides, the insertion of government policies on regulating interests either public or market plays a very influential role. It sets rules on prices and salaries that can result in the alteration of the real relationship between the square and the common public interest. By upholding a robust marketplace, there are discoveries on strategies via the entrepreneurial rivalries and good feedbacks via the income and loss system.
According to the economic theory, the public interest becomes the commercial market that is fragile and has the tendency to operate ineffectively, inefficiently, and for some individuals in the society. The public interest terminology is unsurprisingly used to justify a broad range of proposals or actions in several ways. However, it is unclear what it means; there is a suspicion that this phrase is functional as a cover-up in garnering some support. Supporting people in a market always ignores the importance of a community thus causing alteration between the good relationship between the public and the marketplace. According to prominent economists like Stigler and Pigou (2014), for a firm to direct and monitor cost-effective markets successfully, the management must keep in mind that the government interventions regulate banks and make them work in a social interest perspective. The argument is one of the influential roles that it plays in reflecting the personal benefit of any individual in society; It caters to anyone above the poverty line. If the government does not participate in such issues, inflation always finds a path in the society creating harsh relationships between business and customers due to the high prices of commodities. Public welfares are easily served by the banks when the administration set aside a certain amount of resources on banks and thus enabling the fair sharing of these recourses efficiently and in social interest. Pigou also believes that these business regulations are prepared in the common interest when they face the demand situation from the public for correcting all inefficient practices. When people follow the rules and steer clear of corruption within the system, they do not favor the individual’s running a particular business, but they prefer the entire society’s interest. According to Stigler and Pigou (2011), he argues in a different state of mind where he says that regulations are always in place when the public demands the proficient allocation of resources. He also discovered that the rules are not a hundred percent efficient and are regularly used by some private players to prohibit the entry of various opponents in the market.
When discussing the public interest theory, one should keep in mind that it is a rational decision in the introduction of legislation. Which mandates for most of the corporates to disclose the immediate impact of their activities on the community and environment, and also; disclosure of the initiatives taken by them to protect the public and the background from the adverse impact of their activities. According to the two arguments between Pigou and Stringer, one can confidently state that the public interest is served if governments and other private administrations make the legislation that mandates and controls the disclosure of the impacts of corporate activities on a business-minded society. Markedly, this not only refers to the influence of their operations but they need to disclose their initiative of enlightening the adverse impact of their actions on a Society. Nevertheless, having to discuss some ideologies in the commerce world. It is true to say that the philosophy that the Administration agencies established in countries regulate the industry in the best interest of the people. However, in real life and practice, they work for the benefit of the industry or market in which they regulate. The capture theory has a different way of viewing this situation. It states that government agencies are always formulated by previous and future industry employees, thereby, the workers of the industry work in the best interest of the industry. The argument answers the question of whether the market combine’s its self-interest with the public Interest in today’s economic life. The capture theory plays a significant role by recognizing the close relationship between the administration agencies and the market in which they function. The companies stipulated for the regulation purposes ensures that the protection of the public interest has a chance to be adhered to from industrial verdicts and activities.
To support this presumption with an example, one can consider a government agency that is established at the state level to regulate the cotton die company and protect the public from some adverse impacts. However, this only applies if the associates of the agency are the past or future workers of the enterprise. Instead of the corporation working for the public welfare, the members of the organizations away starts working with sorts of favor to business because they get attracted by high paycheck as a company employee/worker either in the past or future. If these associates of the agency work for the organization, they get well paid later in future when they join it or rejoins. The government priority and mandate as the only rule maker and these rules can be either simple, straight of very complicated depending on numerous several factors. Some of the highly-regulated companies or industries are the education, transportation, banking, insurance and the communication industries. The several regulations imposed by the administration from these industries are quality and quantity control, rate control and the minimum standard of operating activities and operatives’ protection standards. According to various research on the theory of economics, the regulatory companies or agencies need expertise and deep awareness of the business under regulations. For example; regulating an insurance company, one need the expertise of working with banking agencies so as to know the correct followed procedures. Organizations that are working for tutelage industry on the other hand need’s knowledge in how this trade works. According to the Captured theory, the controllers, companies will always maneuver the things for their profits, and these are the first individuals benefiting of any regulation. But for the disclosure parameter can be benefited to several constituents like workers, banks and the public.
According to the economic interest theory, it assumes that company groups are usually formed to serve a particular commercial interest of the team. These groups stand a place of conflicting each other and they mostly lobby governments’ in making legislations according to their interests, not the public. Unsurprisingly, economic groups do not have the public interest in their agent where they get supported by the regulators who are motivated by their berries. Regulators agenda has changed to maintaining their current positions where they are reelected with the motive to please the economic groups rather than the public interest. In the economic team interest perspective, students taking economics as a subject find that the regulation and the legislation introduced do not lead to the defined accountability of corporations concerning their societal and environmental performance. It is because legislations are put in place keeping economic individuals’ interest in care because of lobbying with the rule. The community must always be eligible for consideration in respect of any matter which is asserted to be a public interest. It enables each, and every individual is aware of the immediate situations and circumstances affecting them.
According to the question whether market reconciles Self-interest with the Public Interest, economists and students find that it is not true, due to the increased cases of corruption and dishonesty in the entrepreneurship world in the modern society. Business tries to exploit the public with the intention of self-interest leaving the public in economic challenging situations like inflations. The government coming up with some stipulated legislations to control this issue have faced criticism due to weak governing systems within it. Influential economic groups easily bribe the regulatory agencies or bodies, and they forget the welfare of the ordinary citizens putting more effort on this selfish teams. Research teams advice that the various regulatory bodies should have the adequate enterprise in the field of specialization either education field or the banking field to offer their maximum in the area. A company should always do things that are for the best of the public interest to have good a reputation now and the future. It can be said that public appreciation and support are valuable elements of the company success in general. From the question, we also find that the market should always understand the relevant public wants and should ensure that it provides goods and services that are of high quality. So that it can preserve its Self-interest from challenging competitors; the public and the market interest should be considerably equal; this ensures that companies don’t make losses and gain sufficient profits whereas, on the other hand, the public enjoys the state of buying and selling their products at a reasonably fair price.
Gregory, P. & Smith, R. (2013). Comparing economic systems in the twenty-first century. Boston: Houghton Mifflin.
Stigler & Pigou. (2014). Economic analysis of institutions and systems (Vol. 33). Springer Science & Business Media.