Tuesday, August 31, 2010

Observing a Market in Kurdish Iraq

A reader, Frank J. Desparrois, Jr, wites and asks for my comments on a post on the Adam Smith’s Institute’s Blog. I responded as follows:

Jan Boucek writes in the Adam Smith Institute’s Blog HERE:

Erbil’s invisible hand’

‘Anyone doubting the existence of The Invisible Hand should pull up a chair on the street terrace of the Star Ice Cream Parlour on Iskan Street here in Erbil, the capital of Iraq’s autonomous region of Kurdistan. What else can explain the sights, sounds and smells that soon prevail?’

‘Where did all this stuff come from? How did it get here? The quantity, the variety, the affordability, the availability - all seem completely natural and expected.

Unless you think about it for a bit. There was no Ministry of Planning that decided how many Toyota Land Cruisers in white or black were needed. No Ministry of Agriculture that methodically allocated chickens to each kebab joint. No Ministry of Communications handed out mobile phones.

No, it was the Invisible Hand – a miracle

I read Jan Boucek's post (I read the Adam Smith Institute’s Blog daily) but I did not comment, having exchanged several blog postings on the invisible hand postings with a serious scholar, David Friedman, in the past few days and I felt I had dealt comprehensively with to subject at relatively ‘higher’ theoretical level that this posting by Jan Boucek, who writes with more enthusiasm than warranted a rebuff from Lost Legacy when I read it.

I receive 20-40 postings a day from my ‘google alerts’, most of them not worthy of a response, unless it is a ‘quiet week’ for more serious nonsense about the invisible hand.

On Jan Boucek’s post, what can I say? I do not believe in 'miracles', or the ‘hand of god’ explanations for how markets work. Their workings are comprehensively known among economists and most certainly were understood and explained by Adam Smith in Wealth Of Nations, Books I and II. Smith did not mention the invisible hand in relation to markets, as claimed by modern economists from the 1950s.

Jan Boucek, sans his reference to the invisible hand, describes a market scene in Kurdish Iraq, which is worth knowing about. It contrasts with the murderous tensions in the rest of Iraq.

Working markets do ‘seem completely natural and expected’ and they happen all over the world where ‘planners’, ‘bureaucrats’, regime soldiers, ‘inspectors’, ‘commissars’, ‘politicians’, and all such agencies keep out of the way, and liberty reigns under law. Markets are so natural, that they appear in the most unpromising of circumstances. The human propensity to exchange took root millennia ago and blossoms wherever individuals meet and mix, despite authoritarian, religious, politics, and stupid myopia tries to stamp it out.

As long as Kurdish Iraq remains autonomous, and free from the Sunni-Shia madness, and the depredations of Turkish nationalism, its people and their markets will prosper and Jan Boucek’s enthusiasm will continue.



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