More Good Sense From Western Washington University

Brandon Dupont, associate professor of economics at Western Washington University writes (12 January) for his Economic Incubator Blog HERE

“On the Fallacies of Free Markets”

“Misconceptions about “free markets” are not unusual but here’s the latest from Justin Semion, with some of my comments below:
According to Semion:

‘The concept of the “invisible hand of the market” underlies classical and neoclassical economic theories advocating for a free market economy, one with no government regulation. In summary, free market theory proposes that supply and demand in the unregulated marketplace naturally reach a state of equilibrium where the maximum possible social good is achieved.’

[To which Brandon replies:]

“First, the “invisible hand of the market” is widely attributed to Adam Smith, yet Smith did not intend it as a theory of markets and only mentioned it once in the Wealth of Nations. Paul Samuelson used the phrase to provide some color to his efficiency theorem of competitive markets, but it is not due to Adam Smith. More importantly, no free market economy (especially the version proposed by Smith) is one in which there is “no government regulation.” Smith himself proposed a variety of government regulations as do nearly all modern economists.”

Comment
Follow the link and read the rest of Brandon’s excellent critique of Justin Semion’s (of Presidio Graduate School) piece. Brandon writes a correct representation of Adam Smith’s views on markets, government, and the invisible hand.

Justin’s piece is typical of modern economics as taught on most campuses and is published in Triple Pundit HERE

The more professors who critique the views of economists like Justin Semion, the better.