Tuesday, November 15, 2005

Alan Greenspan gets it right - for once

I have criticised Alan Greenspan several times here for attributing to Adam Smith notions and ideas he never had, such as advocacy of ‘capitalism’, laissez faire and theories of invisible hands. But, credit where credit is due, Mr Greenspan refers to Adam Smith for once without error. Speaking via video conference links to international bankers at a conference organized by Banco de México, he said in the course of his speech on “Stability and Growth: the role of the Central Bank”:

“Whether by intention or by happenstance, many, if not most, governments in recent decades have been relying more and more on the forces of the marketplace and reducing their intervention in market outcomes. We appear to be revisiting Adam Smith's notion that the more flexible an economy, the greater its ability to self-correct after inevitable, often unanticipated disturbances. That greater tendency toward self-correction has made the cyclical stability of an economy less dependent on the actions of macroeconomic policy makers, whose responses often have come too late or have been misguided.”

No complaints, no quibbles, only belated praise for his correct appreciation of Smith’s legacy, unlike his previous efforts. You can read the entire Greenspan speech at:



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