MYTHS OF NEOCLASSICAL ECONOMICS

David Ruccio writes (31 Oct, 2010) in Real World Economics (11 November) HERE

“The metaphor of the invisible hand”

“Take a course in neoclassical economics or listen to a neoclassical economist and you’ll soon learn of the magic of the invisible hand. And you’ll learn that the invisible hand was Adam Smith’s great contribution to moden economic thought. Much of the rest of Smith is discarded or simply ignored.”- (See HERE)

Comment

NeoClassical economics is mired in errors; much of it is in a fantasy world that does not exist in reality. People do not behave in the manner of precise mathematical ways. Electrons might behave that way but people are individuals subject to a whole range of motivations and consequential actions. 

There is nothing magical, nor miraculous about the metaphor of “an invisible hand”. Human motivated actions have intended consequences and those actions may have unintended consequences, some of which may have beneficial consequences and some which may not be. Some actions lead simultaneously to unintended outcomes (such as an insecure merchants investing locally which adds to "domestic revene and employment" - see Smith’s Wealth of Nations, Book 4) and some to unintended outcomes years, even lifetimes or generations later (see Smith’s Moral Sentiments, Part 4).