Wednesday, October 01, 2008

More Nonsense About Adam Smith and the Turmoil

Antonio C. Abaya writes (1 October) in Cebu Daily News (HERE):

“Free market and gov't intervention”

“This is not the end of capitalism. It is not even the end of American capitalism.
American capitalism, especially as zealously protected by the Republican Party, is anchored on the hitherto unshakeable belief in what is reverentially referred to by its priests and acolytes as “The Market.” Meaning, that the Free Market, the Unseen Hand of Adam Smith, is the best, and even the only, arbiter of economic decisions in the allocation of resources. Hence, according to this secular religion, the best government is the one that interferes the least in the workings of The Market. But that has now been stood on its head.”

Typical of much that is broadcast during the current financial turmoil.

Link Adam Smith to the turmoil; link his ideas to those who allegedly take extreme stances on the role of markets; bring in remarks about the ‘invisible hand’ metaphor and claim that Adam Smith had a theory about invisible hands working in markets; claim Smith believed that self-interest/greed would always benefit the community if left alone; assert that the current turmoil can only be resolved if governments intervene; and conclude that markets have failed.

None of this would have been plausible if Chicago economists had justified their theories on their merits instead of annointing them with the distorted approvals of a mythical Adam Smith (definitely not the Adam Smith born in Kirkcaldy in 1723) who mostly said the exact opposite in many cases to his alleged views and the fantasies of the epigones who understood nothing about the contexts in which he wrote.



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