Wednesday, January 25, 2012

A Correspondent Spots a Looney Tune

"This is just like Adam Smith's economic "Invisible Hand" concept! Only Obama's invisible hands are wrapped in a death grip around America's economic throat." HERE

and writes (A correspondent (25 January):

It seems more likely that Americans have a death grip round the last remnants of the Enlightenment.”

To which I would respond:

I agree. You make a good point, which expresses brilliantly what I have been coming to in my current writing of a review of Warren Samuels’ last book, ‘Erasing the Invisible Hand’ (Cambridge University Press, 2011), for colleagues working in the history of economics sub-division within the broad discipline of economics.

Specifically, the modern myth of the so-called “invisible-hand” of the market that supposedly ensures that complex economies end-up reaching an equilibrium that benefits everybody, whatever the motives of the agents who make investment, pricing, and production decisions (it doesn't). Allegedly it is substantiated in practice (it isn’t), and apart from asserting that the said “invisible hand” exists and carries out this imaginary function, it most importantly, is claimed to carry Adam Smith’s prestigious endorsement (it doesn't).

And that is the rub. This major ”theory”, for that is what it has become by a tidal wave of assertions to that affect, even from Nobel Prize winners, particularly from the 1960s – though initiated in 1948 by Paul Samuelson in his best-selling textbook, ‘Economics: an introductory analysis’ - carries a heavy burden from the extent to which its complaisant policy has been adopted and applied in practice across the world’s economies, with the results with which we are now living under.


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