THERE IS NO ACTUAL INVISIBLE HAND! SMITH FAVOURED NATURAL LIBERTY FOR ALL

Andy West is a sports, culture and politics writer originally from the UK and now living in Barcelona, posts (18 June) on MALAY MAILONLINE HERE

"EU overcomes the invisible hand’s paralysis

The main significance of this development is that it was very much a political victory rather than a case of consumers benefitting from the supposed “invisible hand” of the marketplace.

That famous phrase, coined by the hugely influential 18th century Scottish economist Adam Smith, claims that inefficiencies or inequalities within a free and open market will always be ironed out.

If something is wrong with the system, according to the theory, it will quickly be put right by a producer who would benefit both himself and purchasers by providing a better deal.

The idea that the market “looks after itself” has inspired generations of laissez-faire policies, with champions of the free market believing the chief task of government is to encourage open commerce by staying well out of the way.

It’s a nice idea and largely it works: if a biscuit manufacturer, for example, is charging 10 units of currency for its biscuits but a competitor can take advantage of new technology by reducing the price to eight units without reducing the quality, they will do so and will consequently gain more customers, who will also benefit from paying the lower price. Everyone wins.

The world of commerce often follows this path, meaning that products become better and cheaper for consumers as years go by. Unfortunately, however, it doesn’t always work so cleanly because no market is truly free, open or efficient. …

… The main significance of this development is that it was very much a political victory rather than a case of consumers benefitting from the supposed “invisible hand” of the marketplace.

That famous phrase, coined by the hugely influential 18th century Scottish economist Adam Smith, claims that inefficiencies or inequalities within a free and open market will always be ironed out.

If something is wrong with the system, according to the theory, it will quickly be put right by a producer who would benefit both himself and purchasers by providing a better deal.

The idea that the market “looks after itself” has inspired generations of laissez-faire policies, with champions of the free market believing the chief task of government is to encourage open commerce by staying well out of the way.

It’s a nice idea and largely it works: if a biscuit manufacturer, for example, is charging 10 units of currency for its biscuits but a competitor can take advantage of new technology by reducing the price to eight units without reducing the quality, they will do so and will consequently gain more customers, who will also benefit from paying the lower price. Everyone wins…

….The world of commerce often follows this path, meaning that products become better and cheaper for consumers as years go by. Unfortunately, however, it doesn’t always work so cleanly because no market is truly free, open or efficient.”

COMMENT

Andy West is misled and thereby misleads..

“That famous phrase, coined by the hugely influential 18th century Scottish economist Adam Smith, claims that inefficiencies or inequalities within a free and open market will always be ironed out.”

Adam Smith did not “coin” the “invisible hand”. He used a fairly common 16th-18th century, mainly, theological notion of God’s “invisible hand”, metaphorically to make a simple point, specifically that a merchant unwillinging to trade with foriegn businesses of unknown probity, who is thereby personally motivated to invest instead in his domestic economy, makes profits for himself (personal gain) and thereby and unintentionally also benefits the domestic economy from which other citizens also benefit.

Andy describes a general assertion that “Adam Smith, claims that inefficiencies or inequalities within a free and open market will always be  ironed out.”   Smith made no such assertion, nor was it consequential. Andy is  mistaken.

There is no “invisible hand of the market”. Andy follows with pure propaganda:

“The idea that the market “looks after itself” has inspired generations of laissez-faire policies, with champions of the free market believing the chief task of government is to encourage open commerce by staying well out of the way.”

“Laissez-faire” is often attributed to Adam Smith, though he NEVER used the two words in his Works or Corrrespondence. Indeed, they were and are one-sided assertions about leaving business leaders alone to run their affairs without legislative or labour force “interferance”. The one-sided nature of laissez-faire was illlustrated in the 19th century political disputes that dominated UK Parliamentary debates. (employment of women and infants unprotected in dangerous machine environments; 14 hours of work a day; Factory Acts in “dark, satanic mills”, etc.). 

Smith advocated “Natural liberty for all, not just for Mill Owners.