Tuesday, September 29, 2009

Start With a Myth, End Without an Answer

Mike Farmer writes on “Analogies to America's 2009 recession” (28 September), on Bonzai (a Libertarian Blog) HERE:

The 1929 crash exposed in addition the naviety [sic] and ignorance of bankers, businessmen, Wall Street experts and academic economists high and low; it showed they did not understand the sytem [sic] they had been so confidantly [sic] manipulating. They had tried to substitute their own well-meaning policies for what Adam Smith called the 'the invisible hand' of the market and they [had sic] wrought disaster. Far from demonstrating, as Keynes and his school later argued -- at the time Keynes failed to predict either the crash or the extent and duration of the Depression -- the dangers of self-regulating economy, the degringolade [sic][?] indicated the opposite: the risks of ill-informed meddling.”

Relying on “what Adam Smith called the 'the invisible hand' of the market” is unlikely to do much good because the idea of an “invisible hand of the market”, attributed since the 1950s to Adam Smith, is wholly mythical.

There is a libertarian case for criticisng history (both in 1929-41 and 2006-09) but I do not think Bonzai makes that case on this occasion.



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