Tuesday, December 30, 2008

Another Fairy Tale

John Goodwin comments on an editorial in the Democrat Herald (HERE):

Marketolatry has been the reigning religion of global capitalism. It has exhibited blind faith in Adam Smith’s “Invisible Hand” (I. H.), which Smith believed governs the allocation of resources, capital and labor in the most efficient possible way.”

While Smith’s confidence in the market to self-regulate was conditional, later apostles like Milton Friedman and Alan Greenspan turned that principle into dogma. And dogmas have a way of becoming unconditional
.”

Comment
People ascribe views to others also ‘need honesty”, which in this case requires acknowledgement that Adam Smith said no such thing. He did not ‘believe’ that that an invisible hand “governs the allocation of resources, capital and labor in the most efficient possible way.”

That is pure hyperbole and is untrue in every respect.

It may be that Friedman and Greenspan believed such nonsense, but Adam Smith did not. That a correspondent to a newspaper believes it to be true is a measure of how deep the myth of the inviisble hand has penetrated a nation's consciousness.

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