Final answer:
Rational Egoism is a normative theory that endorses acting in one's own rational self-interest. Adam Smith recognized that humans exhibit both self-interested and altruistic behavior, implying a need for balance. Rational Egoism requires careful application to avoid conflicts and to accommodate the collective good alongside individual interests.
Step-by-step explanation:
Rational Egoism in Normative Theory
The theory concerned here is Rational Egoism, which is a normative theory suggesting that individuals ought to pursue their own rational self-interest. This theory is grounded in the idea that when actions do not obviously benefit us, we must justify them by arguing that they are indeed aligned with our self-interest, thereby making the action permissible. Rational Egoism posits that it is rational and morally right to act in one's own self-interest, but it raises questions about how this principle functions within society, especially when individual interests could lead to conflicts.
Notably, Adam Smith, regarded as the father of modern economics, recognized that humans are not solely self-interested but also have altruistic tendencies. In his book The Theory of Moral Sentiments, he acknowledges that people have an inherent interest in the well-being of others. This suggests that while self-interest is a significant driver of human behavior, it is important to balance it with the consideration of others' happiness and well-being.
While Rational Egoism provides a framework for understanding human actions, it also needs to be scrutinized to avoid potential abuses. Establishing criteria for what constitutes an individual's interests is crucial to ensure that actions based on self-interest do not lead to conflicts between people. In situations where conflicts arise, it may be necessary to find creative compromises that honor both self-interest and the collective good.