Monday, October 16, 2006

Invisible Hands Again

A curious piece by James Rose, editor of
His theme is that what he calls ‘neoliberalism’ is alive and well in China but under siege in the US, and that its precepts about free markets are really a political choice not solely an economic one. China is making that choice, pragmatically, while the US is slipping into ideology.

He writes:

“Neoliberalism, also known as neoclassicism, is generally considered to be characterized by the belief that markets should be open and uncluttered. They should move in the grip of Adam Smith's invisible hand - the collective wisdom supposedly generated by the market - and should not be influenced by non-market actors such as governments or civil groups. So, how does China, an authoritarian society, run by a highly meddlesome communist government, qualify to be considered neoliberal?”

From the The Standard (China’s business newspaper), 16 Oct Hong Kong.

Statements that markets should move ‘in the grip of Adam Smith’s invisible hand’ are, of course, risible. Rose also defines as ‘the collective wisdom supposedly generated by the market’. This is a curious statement.

I like the ‘supposedly’ qualification – because nowhere did Smith link ‘an invisible hand’ to markets. The myth that he did is from the Chicago version of Adam Smith, who has little in common with the Kirkcaldy original Adam Smith.

Where this leaves the theory of political choices over economic, I cannot fathom.


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