Gregory Shenkman (Letters, February 16) claims that Adam Smith made it clear that the best outcomes for all result from “free markets and enlightened self-interest”, and that current environmental, social and governance investment practices, since they are inconsistent with a free market, will make us all poorer in every respect.
I’m not sure Smith did say quite that. But if he did, he was not taking into account the ubiquity of the “prisoner’s dilemma”. This is where a group of individuals, each of whom acts out of self-interest, all do worse than if they had co-operated with one another. The obvious current example is climate change, which is much more likely to make us all poorer in every respect than ESG investing.
Nor is it clear why such investing is inconsistent with a free market. Investors make their own informed choices about which products to buy, and prices will depend on the market rather than on any kind of objectionable governmental interference.
Professor of Moral Philosophy
Uehiro Fellow and Tutor, St Anne’s College University of Oxford, UK