Saturday, February 02, 2008

We Are All Doomed and the Invisible Hand

Prof. Claudia von Werlhof (professor of women's studies and political science at the University of Innsbruck, Austria) writes a (long) piece in Global Research here:

The Consequences of Globalization and Neoliberal Policies. What are the Alternatives?

The question remains, of course, why Adam Smith’s “invisible hand” (which supposedly guides the economic process towards the common good, even if this remains imperceptible to the individual, Binswanger 1998) has become a “visible fist”? While a tiny minority reaps enormous benefits of today’s economic liberalism (none of which will remain, of course), the vast majority of the earth’s population, yes the earth itself, suffer hardship to an extent that puts their very survival at risk. The damage done seems irreversible.”

From a myth about Adam Smith, Claudia von Werlhof goes on to ‘irreversible’ apoplectic ‘damage’. That’s the problem with doom-laden predictions; if they are irreversible there’s not much point getting depressed and worked up about them. It’s like noting that the earth could be hit by a giant meteorite any time between now and whenever, but certainly in the next million years, and if that doesn’t get you, the earth will be burnt to a cinder by the sun in its last billion years, so what’s the point?

Claudia von Werlhof cites Hans Christoph Binswanger, 1998, Die Glaubensgemeinschaft der Ökonomen; München, Gerling Akademie Verlag (his biographical details and an example of his work relating economics to Faust is here) for her version of the invisible hand, which ‘supposedly guides the economic process towards the common good, even if this remains imperceptible to the individual’.

Yet Smith’s use of the metaphor was about the whole (the annual production of the ‘necessaries, conveniences and amusements of life’) being the sum of its parts (what individuals maximise by striving to maximise their own production of wealth). It did not have the connotations given to it by Hans Christoph Binswanger or any other economist influenced by the Chicago ‘heresy’.

Smith did not go on to argue the general proposition that an invisible hand ‘guides the economic process towards the common good’, because he well knew that not all individuals in an economic process engage in actions that conceivably achieve that end intentionally or otherwise. In Books I and II (and elsewhere) of Wealth Of Nations he gives over 50 examples of individuals doing anything but striving to do other than maximise their own benefits at the direct expense of other individuals in society, for example, merchants and manufacturers who impose monopolies on consumers.

All that stands between these ends and the alleged horrors of ‘neoliberalism’ (a passing theory about economic policy, to be replaced with others in due course) is the pre-requirement that all six, seven or ten billion of us agreeing (or forcing others where some undisclosed number won’t agree) to decide there will be ‘no more plundering, exploitation, destruction, violence, war, coercion, mercilessness, accumulation, greed, corruption’.

A modest aspiration I don’t think.

En passant of the tone of Claudia von Werlhof’s polemic I found this: “The earth is not the paradise it was … The devastation has been incredible: large parts of our drinking water are disappearing mainly due to the melting of the glaciers and polar caps’.

Drinking water comes what we process from rainwater and this comes from the natural cycles of the sea-clouds-rain- rivers-sea. It has little to do with melting glaciers and polar caps (assuming they are melting). The last time that the earth went dry was in the ice-age when the ice caps expanded to cover much of the northern hemisphere, trapping the water and lowering sea-levels, the opposite of the Claudia von Werhof’s ‘devastation’.


Post a Comment

<< Home