Wednesday, June 20, 2012

Instant Answers Spread Instant Rubbish


One of Many Lazy Student"s Answer Services

“What wast(sic) the invisible hand theory proposed by Adam Smith?”
Answer1: “the economy will automatically adjust to the needs of buyers and sellers.”
Answer 2: “Adam Smith's invisible hand refers to the self correcting features of a free market. Prices respond to the combined influences of supply and demand, and no regulatory agency or deliberate guidance is... “
Answer 3: “Adam's Smith's Invisible Hand of the Marketplace is the theory that economic imbalances are self-correcting, not requiring intervention by government so long as the equal rights of the individual are...”.
Answer 4: “The greatest benefit to a society is brought about by individuals acting freely in a competitive marketplace in the pursuit of their own self-interest.“
Comment
What has Answer 1 got to do with anything Adam Smith wrote?
Answer 2 reveals its nonsense in its own sentence: If prices respond to supply and demand, what role does the “invisible hand” play in this process?  Surely visible price adjustments are enough?
Answer 3: what besides price changes are required for economic imbalances to be “self-correcting”.  It cannot be a universal benign self-interest because we know that individual self-interests can conflict: a self-interested domestic trader lobbies for tariffs to keep out competition to maintain or raise prices; a consumer prefers access to foreign-sourced imports to lower prices.  Adam Smith identifies malign self-interested actions over 70 times in Wealth Of Nations. 
Answer 4: But suppose that individuals acting in their self-interest are also inclined to pollute, dilute quality, or dispose of waste from dangerous processes into the nearest fresh-water river to avoid the costs of clean-up to increase their profits, How does that “benefit society?”
The whole alibi of an invented “invisible hand”, attributed to Adam Smith, is a regrettable feature of modern economics.  It discredits economic analysis (and the history of economic thought) and sends people running to the feeble protection of government (also a major polluter) and helps justify the often bloated regulatory costs of compliance with meddling anti-market initiatives, while discrediting those regulatory costs that are necessary.
None of these contradictory assertions were proposed by Adam Smith.  He did not have a theory of "an invisible-hand" guiding markets.

4 Comments:

Blogger Willy B Good said...

I must confess that I used the "Invisible Hand" theory on an assignment last term, even though I knew from reading this blog that the invisible hand "theory" was out of synch with what Adam Smith was trying to convey. My lecturer in the subject gave us the whole "Adam Smiths invisible hand theory teaches us that individual ambition serves the common good" spiel. I didn't bring up this blog to him - I think challenging a lecturer in front of other students is quite innappropriate.

Please forgive me for this transgression. I've reasoned it out like this - Our tutor had hundreds of assignments to mark. For all I knew mine could have been in the middle or dead last. Do I take the chance of possibly confusing a tired marker and go through what is in this blog (Adam Smith didn't invent laissez faire, taken out of context etc), or do I just write was was taught to us in class and take the easy marks on offer?

10:19 a.m.  
Blogger Gavin Kennedy said...

Hi Willy
The eternal dilemma of the eternal student with the eternal lecturer who is less than proficient.
You are right to avoid embarrassing a lecturer or fellow student in public. You may meet that lecturer again on a promotions committee (my fate once), or that student (my fate more than once) in later life.
Scholarly manners are always best in the Republic of Letters.
You write what they teach. You can step sideways in later years and use such formulae as: "Prof. So and So explains it this way"; "according to Prof. Such and Such (QJE, 1958") who asserted that ...", and so on.
Or you can use "(Cf. Little and Large, AER, 2012)" if it a directly contradictory assertion.
No matter what you write, if you establish your reputation, you will be forced to take sides by events and associations, and your company with other like-minded scholars.
Always remember you can ask questions and interrogate the evidence by asking people to explain ideas.
As a student pre-graduation, you must establish your competence in what passes for established knowledge, to avoid charges of being in difficulty with common concepts.
I am retired and hence not vulnerable to career damage; I remain vulnerable to reputation damage, which is not the same thing. I have three outstanding requests for chapter contributions to symposia edited by prestigious editors; nevertheless, I treat prestigious critics of Lost Legacy's themes with scholarly manners.
Remember Cromwell's plea to some critics firmly convinced of their being right in their theological doctrine, to consider in the "bowell's of Christ, that they may be wrong".
Gavin

2:00 p.m.  
Blogger Gavin Kennedy said...

Hi Willy
The eternal dilemma of the eternal student with the eternal lecturer who is less than proficient.
You are right to avoid embarrassing a lecturer or fellow student in public. You may meet that lecturer again on a promotions committee (my fate once), or that student (my fate more than once) in later life.
Scholarly manners are always best in the Republic of Letters.
You write what they teach. You can step sideways in later years and use such formulae as: "Prof. So and So explains it this way"; "according to Prof. Such and Such (QJE, 1958") who asserted that ...", and so on.
Or you can use "(Cf. Little and Large, AER, 2012)" if it a directly contradictory assertion.
No matter what you write, if you establish your reputation, you will be forced to take sides by events and associations, and your company with other like-minded scholars.
Always remember you can ask questions and interrogate the evidence by asking people to explain ideas.
As a student pre-graduation, you must establish your competence in what passes for established knowledge, to avoid charges of being in difficulty with common concepts.
I am retired and hence not vulnerable to career damage; I remain vulnerable to reputation damage, which is not the same thing. I have three outstanding requests for chapter contributions to symposia edited by prestigious editors; nevertheless, I treat prestigious critics of Lost Legacy's themes with scholarly manners.
Remember Cromwell's plea to some critics firmly convinced of their being right in their theological doctrine, to consider in the "bowell's of Christ, that they may be wrong".
Gavin

2:01 p.m.  
Blogger Willy B Good said...

Thank you very much for your sound advice. I will keep it in mind for the duration of my course.

All the best,

William.

10:35 a.m.  

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