Sunday, October 28, 2012

Chomsky on Smith's "Vile Rulers of Mankind"

Mike Norman writes ‘Mike Norman Economics”, October 26, HERE 
“Noam Chomsky does Adam Smith”  "Who Owns the World?"
Actually, a good answer to this was given years ago by Adam Smith, someone we’re supposed to worship but not read. He was—a little subversive when you read him sometimes. He was referring to the most powerful country in the world in his day and, of course, the country that interested him, namely, England. And he pointed out that in England the principal architects of policy are those who own the country: the merchants and manufacturers in his day. And he said they make sure to design policy so that their own interests are most peculiarly attended to. Their interests are served by policy, however grievous the impact on others, including the people of England.
But he was an old-fashioned conservative with moral principles, so he added the victims of England, the victims of the—what he called the "savage injustice of the Europeans," particularly in India. Well, he had no illusions about the owners, so, to quote him again, "All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind." It was true then; it’s true now.”
I have commented on Noam Chomsky’s loose language before on Lost Legacy.
Chomsky writes: “in England the principal architects of policy are those who own the country: the merchants and manufacturers in his day.”    This would have been news to the landlords who owned the land of England in Adam Smith’s day in the 18th century and until well into the 19th century.  They formed the largest proportion of the legislature in London, and effectively run civil government in the large countryside, and they formed the officer class in the army and the upper ranks in the Royal Navy.  Many of the families and members of the upper classes who decided most things were intermingled with landed interests and many of the returning new rich (often from India or the North American British colonies) aspired mostly to retire wealthy to estates in the countryside, not to become “merchants and manufacturers”, still the subject of ruling class snobbery.
The industrial Revolution, so called, was a drawn out affair, more like a hundred years transformation than a short event, Smith never commented on it.  Smith’s politics are unknown, despite years of effort to unravel them, but he leaned more to the Whig side of the political divide rather than the Tory side.  His family were firmly moderate as Calvinists rather than hard-line zealots, and there is evidence that he became less religious, even skeptical about “revealed religion”, as he grew older, as seen in his revisions to later editions of his Moral Sentiments after his religious mother died in 1784, and in his Wealth Of Nations  in his strong critique of the established churches of the State in Book V.
Smith’s numerous and strong criticism of “merchants and manufacturers” in Wealth Of Nations and his even stronger criticism of European behaviours towards indigenous peoples found the America, India and through the slave traders in Africa, does not testify to his being a “an old-fashioned conservative with moral principles”, so much as to his being a moderate Whig with moral principles.  Smith’s reference to “the vile maxim of the masters of mankind” is from a longer paragraph, from which I quote, because Chomsky’s quotation is cut to force his wrong conclusion about which social class Smith refers. Chomsky’s truncated version obscures Smith’s politics to give credence to Chomsky’s politics and his assertions:
The capricious ambition of kings and ministers has not, during the present and the preceding century, been more fatal to the repose of Europe, than the impertinent jealousy of merchants and manufacturers. The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit of a remedy. But the mean rapacity, the monopolizing spirit of merchants and manufacturers, who neither are, nor ought to be the rulers of mankind, though it cannot perhaps be corrected, may very easily be prevented from disturbing the tranquillity of any body but themselves” (WN IV.iii.c: 493).
It can be seen that while Chomsky gives the impression that Smith is talking about the “owners”, who were, he claims, the  “merchants and manufacturers.  In fact, Smith refers to the “ancient evil” of “kings and their ministers”, and the rulers of the landed interests who owned most of the wealth of the countries that made up Europe since the 4th century by their “violence and injustice”, as borders changed and rulers’ dynasties passed changed.  The correct reference to who Smith meant in this passage is revealed when all of the passage is included and not just the truncation tried by Chomsky. 
To be an “ancient evil”, Smith must have referred to the long history of Europe over millennia and not just to the 17th and 18th centuries.  Also he denied that “merchants and manufacturers” should be the “rulers of mankind”, so for him to assert they were “the rulers of mankind” would be to assert a counter-factual.  Hence Smith didn’t. 
He suggested that the power and influence of "merchants and manufacturers" may "very easily be "prevented", which does not suggest that he considered them to be an entrenched ruling class in his life time.  What thyey became was beyond Smith's knowledge - he died in 1790.
As far as Adam Smith in the 18th century was concerned, the “merchants and manufacturers” were not the answer to the question of “Who Owns the World”.
[Also, Mike Norman may care to note that in Smith’s lifetime, there was a United Kingdom of Great Britain and Ireland, consisting of England, Scotland, Wales and Ireland; England was a part of that new country (since 1707), not a separate entity. Smith was interested in the welfare of Scotland, where he lived most of his life, England and the rest of Great Britain, He was not only interested in “England”, which he occasionally visited.]

Saturday, October 27, 2012

Oh, Dear

SYED BAKHTIYAR KAZMI writes HERE in Business Recorder on The science of economics”  
Even under the free markets theory, if the invisible hand cannot be expected to be honest and unselfish, what exactly is the right amount of government regulation remains an unsolved riddle.”
How does a metaphor acquire a particular moral code and for what does it acquire one?  There is no entity inside a metaphor. The “unsolved riddle” is a figment of someone’s imagination, like fairies at the bottom of the garden.  How does economics deserve the attributes of being a “science” from being expressed by silly fantasies like this?

Misinformed About Adam Smith

Ronnie Cameron writes HERE on Wealth of Intelligence Can Lead to the Wealth of a Nation”
 “Adam Smith, the creator of political economy wrote the Wealth of Nations. Wealth of Nations was the first written doctrine on how a nation can gain wealth and the practice of free markets. Philosophies like 'Division of Labor' and 'Market Price of Commodities' have shaped economic thought since 1776. His work has driven the world into a successful Industrial Revolution. His theories are very much relevant to this day but we are in an age where more is necessary. In this era of globalization and technology, education and intelligence is what sets people apart in the today's workforce. We live in an age where information is in absolute abundance. Billions of people have access to a world of knowledge at the touch of their hands through smartphones and tablets. But with all of this information and knowledge there is very little understanding.”
You can follow the link and read Ronnie Cameron’s recommendations, including his observation that “we believe that our government is supposed to solve this problem”.
However, I am disappointed with his solution to the problem, as much as I am disappointed with his portrayal of Adam Smith’s role in the 18th century.
Adam Smith did not “create” political economy.  He joined a line of authors of various “solutions” to the perceived problems of political economy” as they saw them in the decade, and in some cases, centuries before he began to write his now famous “Wealth Of Nations” published in 1776, but which he commenced in 1760, and which he had been lecturing on since the 1740s. 
“Philosophies like 'Division of Labor' and 'Market Price of Commodities' have shaped economic thought since 1776”, writes Ronnie Cameron, but many authors had written and taught about the ‘division of labour’ before Adam Smith – which predecessors he recognised had “very often taken notice of” the “division of labour” before him in paragraph 2 in Wealth of Nations (WN I.i.2: 14), and others who also had written about the “'Market Price of Commodities” before him.  Even more embarrassing for Ronnie Cameron’s theme, Sir James Steuart published his “Principles of Political Economy” on 1767, nine years before Smith published  Wealth Of Nations” in 1776.
Moreover, to assert that Smith’s Wealth Of Nations drove “the world into a successful Industrial Revolution” is absurd.  Societies do not change or get driven like that from a single book.   Societies are not designed nor premeditated by any author, no matter how brilliant an author’s insight or intentions.  
The world’s societies since our species occupied the seaboard and hinterland of East Africa from two hundred thousand years ago and their descendents there afterwards socially evolved through the Ages of Hunting and Gathering; Shepherding, Farming , and (“at last’) Commerce  did so without any books.  If anything history shows that human attempts to lead societies in any particular direction by “sacred Words of the Invisible Gods” are hopelessly inadequate (and usually ended in tears, certainly in disappointment).
The evolution of the “industrial revolution”, as we call it, was a very slow process practiced by individuals over centuries beyond the lives of those whose endeavours cumulated beyond individual lifetimes, mostly not connected to each other, and certainly not to any book.   China reached the pre-industrial stage but failed to continue even with its impressive knowledge of the anti-chamber of the necessary technology.  The impressive apparatus of the Chinese State suppressed the necessary elements of individual liberty in its cloying superstition and historical authoritarianism.  The industrial revolution was underway before Smith’s Wealth Of Nations and he never mentioned it because he did not notice it.  Nor did precious few others until after its birth pangs were past, and its successor revolutions were rapidly evolving towards and beyond “take off”.
Negative evidence for the above argument is the fate of societies designed by philosophers but without deep foundations in the fundamentals regarded by the “revolutionaries” as necessary for their politics.  I am referring to the supposed “successor societies to “capitalism” in the form set out in such as the  “Communist Manifesto” by Marx and Engels,  or any other of the phoney utopias proposed from time to time (the latest of which are the hopeless suggestions for reforming capitalism or for saving the planet, or for world government and so on).
 Now one thing is absolutely certain, taking the whole of written history into account (and probably certain for much of pre-history too), no government is ever likely to be able solve be able to solve the problems considered to be important enough to need to be solely solved by a government.  The most I would concede is that a government may be part of a solution, but never all of it, because governments are often a major factor causing the problem, not least because of their arrogance about their abilities as seen by wild-eye certainties of their political ideologies.

Friday, October 26, 2012

Not Quite Right

I am often asked why I spend so much time on this Blog bashing away at the so-called idea of Adam Smith’s that “an invisible hand” of  “markets”, “supply and demand”, the “economy”, or whatever, so arranges the economy (“miraculously”) that people left free to arrange their capital in the way they choose in their “self-interest’ (even their “selfishness” claimed Paul Samuelson), will inevitably advance the “best interests” of the community.   No such entity exists.  The politics and moral conventions of society decide  how a society’s people behave.
Read this extract from the piece below by IMTIYAZ UL HAQ Sr. Assistant Professor in the Department of Economics, University of Kashmir, who writes in Greater Kashmir HERE  and note out why the Western myth of Adam Smith’s invisible hand is so pernicious, not just for disappointed Western voters said to be suffering from “austerity”, but for deeply impoverished poor people in much of the developing world, who really know what real austerity feels like.
“What ails J&K Economy: Do We Lack Resources, Big Investments or Sound Policies?”
This write up is the outcome of recently held interactive session at the University of Kashmir between the big Indian business tycoons and the students of Kashmir University. The event was organised with the expectation that these industrialists can provide employment opportunities by way of placement of our students in various Indian companies and to explore investment opportunities in different sectors of the J&K economy to kick start the process of development and employment generation. However, what emerged out of this interaction was the reluctance of these industrialists to invest in an atmosphere of instability and unrest within the region. The condition that peace and stability is the prerequisite for producing a conducive environment for investments and economic development apparently seems to be a rational argument from the private sector viewpoint, but a preposterous preposition from the social standpoint. One cannot expect stability and peace to emerge unconditionally from a situation of social unrest, assuming the underlying cause being economic backwardness and mass unemployment. This implies getting trapped in a vicious circle. Now even if we make another assumption that the region somehow becomes stable and expect big investments to fillip up the process of growth and development; to what extent is this true? It all depends whether we are the believers of “trickle down” theory and expect Adam Smith’s “invisible hand” to play its role in promoting the social welfare. I can’t dare to challenge this idea; after all this principle is the underlying factor of all the advanced countries of the world. But surely in our circumstances one can observe that the so called invisible hand has either developed arthritis or has turned into ‘invisible handshake’. Business tycoons are always in search of profits. They are more concerned about their own gains than social welfare. And secondly, amidst inappropriate policies and weak institutional framework, the impact of private sector big investments would be to invite exclusive growth- nothing less than a social disaster. Under such a situation it primarily becomes the responsibility of the local government to frame appropriate development policies, keeping in view the regional specificities. As far as possible the development policies should be designed to provide a solution within the system itself before asking for any external help. This should not be viewed as a conservative approach in the era of globalisation. After all, preserving and strengthening the fundamentals of any economic region, before opening it up, is a sure recipe for achieving self- reliance and sustainable development...
IMTIYAZ UL HAQ goes on suggest that  a comprehensive programme, by setting up separate and full-fledged institutions and departments producing professional and qualified personnel capable to handle all the potential sectors of our economy. After availing professional degrees in all these areas, [GK: that is expand Kashmir’s universities!] one should genuinely expect the business activities to get started with entrepreneurial spirit, manageable amounts of capital, and a minimum government concern.”   
IMTIYAZ UL HAQ is close to being on the right track, but also shows signs of straying from it.  He writes: “It all depends whether we are the believers of “trickle down” theory and expect Adam Smith’s “invisible hand” to play its role in promoting the social welfare. I can’t dare to challenge this idea; after all this principle is the underlying factor of all the advanced countries of the world.”
I suggest he acquires the academic courage to dare to “challenge” the “invisible hand” so-called “principle” which is a purely invented property of markets.  Quite rightly, governments are part of the problem, but so are invented notions like the “invisible hand”, imported into modern economics for quite another purpose than the use by Adam Smith of a 17-18th century mainly theological metaphor.
I agree with him that social stability, the rule of law, and the widespread adherence to the precepts necessary for markets to function and even to achieve modest growth.  Governments and their departments are not very good at economics, especially when they try to run businesses through their agencies and over-burden them with regulations.  Governments can set the rues, enforce compliance through clear rules, but generally should get out of the way.  Entrepreneurs can play their roles of marshalling resources and people to produce competitively what people are willing to pay for.
However,  while I suspect that a university academic’s solution to growth problems is put forward with the best intentions, the expenditures required must come from taxation or government borrowing, or aid.   The “entrepreneurial spirit” gets going from a genuine freedom to do so.  There is no “invisible hand” awaiting release. And it didn’t come from Adam Smith in the form it is widely known as today. 
Even in the most desperate of circumstances, where state corruption, criminal gangs, and petty laws plague big and small entrepreneurs and their workers, as is common in the city slums of Asia, and in gangster corrupted capitalism, much entrepreneurial energy is found at work, if often “underground”, to keep ahead of government inspectors, gangsters, and the money-lenders.   Unleash that entrepreneurial force and apply the advice of “markets where possible, the state where necessary”, and stand back and stay back.    
For evidence just look at 20th-century Hong Kong … and how the West really started in the 19th-century. Sure, we had widespread slums to contend with, but without entrepreneurial-led markets, we would still be there in those slums in the 21st century.

Tuesday, October 23, 2012

Do Such People Understand Adam Smith?

Scott Cooney writes, Adjunct Professor of Sustainability at the University of Hawaii,Inspired EconomistHERE 
Where conservative capitalism breaks down: Three primary sources of free market failure”
Many people criticize policies and elected officials based on strong support for what they believe to be free market capitalism. But do these people actually understand capitalism? What they believe to be capitalism: getting the government off the back of the private sector, is not true free market capitalism. …
Adam Smith, the man many in the conservative arena espouse to be the father of modern capitalism, was an 18th century economist who wrote an influential book called The Wealth of Nations. In it, he argues three main tenets. These principles have become the standards by which capitalism, as we know it (and many peoples’ level of acceptance of it) is measured.
The first is the invisible hand. Smith argued that there is an invisible force at play in the market that guides production. ... The second principle Smith espoused is that the free market alone should determine the types and quantities of goods and services (meaning that government should never make those decisions)…
… His third principle was that, if all individuals were striving for their own self-interest, that cumulatively, those efforts would have the greatest overall good for society. By working really hard, these folks would create economic opportunities for themselves and others, and that provided the best overall benefit.”
Scot Cooney continues:”
“ If Smith lived today, his theories would likely have taken into account three main sources of free market failure:
Externalities. Externalities are costs associated with something that are not paid for by that something. … Tragedy of the Commons. This is a phenomenon where, if no one is governing the use of a common resource, then what is to stop companies from exploiting it to its fullest? … Information asymmetry. Adam Smith’s theories only hold water if everyone involved has equal access to information on which to make decisions relevant to the market.                       
“About Scott Cooney Scott Cooney (twitter: scottcooney) is a green business startup coach, author of Build a Green Small Business: Profitable Ways to Become an Ecopreneur (McGraw-Hill), and developer of the sustainability board game GBO Hawai'i. Scott is a vegetarian, an avid cyclist, and an organic gardener.” Follow the Link.
What a travesty of Adam Smith’s economics and his moral philosophy!  One without the other is like a carriage without a horse (a simile!).
Adam Smith never said there was an “invisible force” at work.  He used a metaphor of “an invisible hand” (popular in the 18th century and used widely, mainly by theologians) on two occasions only to “describe in a more striking and interesting manner” (Smith, "Lectures on Rhetoric", 1762, 1983, p 29), two instances in two quite separate instances, separated by centuries, where the individuals concerned – “a proud and unfeeling landlord” forget he shared his crop, and an18th-century “merchant” - worried about the security of his capital if he sent it abroad in “foreign trade”, acted to protect their interests.
 The landlord was forced by circumstances to provide food for “the thousands they employed”, because without food they could not labour on his lands, and the merchant was led by his insecurity to avoid foreign trade and invest domestically.  The unintended outcome of their privately motivated behaviour was that they and their peasants had a means to live and thrive through successive the generations, thus propagating “the multiplication of the species” (Moral Sentiments, IV.i.10: 183) (Smith clearly disapproved of the landlords’ arrogance generally).  The merchant’s contribution to domestic industry helped to increase “domestick revenue and employment” (Wealth Of Nations, IV.ii.9: 456).
Smith said nothing about a general “invisible force” at work; the metaphor could be used in other instances where unintended consequences were occasioned and where the invisible-hand metaphor may be appropriate.  But beyond doubt,  general “self-interested” actions need not benefit society at all. Indeed, 18th century society was afflicted by mercantile general self-interests promoted by merchants, manufacturers and governments that were directly and indirectly contrary to the interests of consumers, through intentional tariffs and prohibitions, which in no sense “benefitted” a society.  The claim that self-interests, sometimes even claimed to include “selfish” actions (Paul Samuelson, 1948) benefitted society is a false proposition, widely used by people ignorant (not too strong a word) of the actual writings of Adam Smith, who project onto Adam Smith their own ideas or simply mimic "prestigious" others.
It is factually inaccurate to pretend that Adam Smith thought the “the free market alone should determine the types and quantities of goods and services (meaning that government should never make those decisions)”.  He gave several examples of the government’s appropriate role in deciding which types of goods and services should be decided by government (see Wealth Of Nations: on the Navigation Acts (WN, 464); (Sterling Marks on plate and bullion (WN 138-9); regulations of paper money in banking (WN437); obligations to build party walls to prevent the spread of fire (WN324); erecting and maintaining certain public works and public institutions intended to facilitate commerce (roads, bridges, canals and harbours) (WN723); ‘Premiums and other encouragements to advance the linen and woollen industries’ (TMS185); coinage and the mint (WN478; 1724); post office (WN724); registration of mortgages for land, houses and boats over two tons (WN861, 863); laws against banks issuing low-denomination promissory notes (WN324) and sixteen other instances.  He agreed that these regulations “interfered” with “natural liberty”, but they were necessary for an economy to function for the public good.
The assertion that by “working really hard, these folks would create economic opportunities for themselves and others, and that provided the best overall benefit” is counter-factual as shown by Adam Smith’s “violent” (his word) attack on mercantile political economy operating in 18th-century Britain.
As for Scott Cooney’s thoughts on “externalities”, the “tragedy of the Commons”, and “information asymmetry”, his glaring misunderstanding of economics is worrying.  It is the absence of property rights, not their presence that is the main cause of the problems created by these issues. Nobody “owns” pollution, therefore included in the remedy is the legal compulsion of those creating the pollution to “own” it and clean it up.  Nobody “owns” the commons, therefore assign/sell/auction license ownership and therefore allow the owners to charge for usage, thus reducing over-exploitation of the “free” good. Markets are the best means of reducing “asymmetry’ through competition among suppliers, which, of course, takes time, but attempts to force social exchanges usually make things worse as much as the absence of markets always makes things worse in perpetuity. Elementary Economics 101! 

Wednesday, October 17, 2012

Loony Tunes no 68

Nathan Ilunga writes There is invisible hand against GBM – campaign manager in Zambian Watchdog HERE
The demonstration was covered by both the public and private media so that the whole nation knows how the people of Kasama feel about the saga but this has been played down too except for Radio Mano, a community radio station disseminated this information within their catchment area but for other media houses it’s like there is an invisible hand conjuring up tricks so that they continue to reporting negatively about GBM.”
There is clearly a double edge sword to Adam Smith's Invisible Hand.” HERE 
[GK: Comment: a mixed metaphor too far.]
Slideshow 5000 Pro HERE 
“Select your favourite images and photos through the intuitive, fast user interface, sit back and watch the invisible hand gently throw them, one by one, onto the table while the camera slowly pans around.”
“Is Adam Smith's Invisible Hand a Pickpocket?”

5 SYED BAKHTIYAR KAZMI writes in Business Recorder on “The science of economics”
Even under the free markets theory, if the invisible hand cannot be expected to be honest and unselfish, what exactly is the right amount of government regulation remains an unsolved riddle.”

Don't Blame Adam Smith for 21st-Century Conduct

Davis Blair posts in “TechaisleHERE 
In this WSJ article, the Congress is investigating the meteoric rise of Huawei, China’s major telecommunications equipment provider and accusing it of using technology theft and government handouts as the path to its’ incredible growth. The article insinuates that IBM is a major cause of this situation because they have shared advanced technology and management best practice approaches as a shortcut, and summing it up with:
“U.S. government concerns culminated this week in a report by the House intelligence committee that labeled the company a security threat and warned U.S. telecom companies against doing business with it.”
 Huawei counters that they have spent over $400M with US consulting firms like IBM, Accenture, BCG, PWC and others since 1997, and at one point after signing strategic agreement they had 200 IBM consultants on site to optimize core systems and train management in the most efficient approach expand internationally. If there is real evidence of technology theft (none in the article), that would be basis for retaliation, but it did not seem like IBM and others were complaining during the bonanza: Gerstner’s IBM made the transition from antiquated mainframe manufacturer, about to be broken up, into the world’s largest professional services provider on the back of international deals like this, and probably got a couple of large US government contracts in the process. McDonalds, Wal-Mart, Oracle and Boeing have done pretty well also, and American consumers have been blessed with an abundance of all the “stuff” they can buy for the absolute lowest price (not cost). According to the venerable Adam Smith:
“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.”
-Adam Smith, The Wealth Of Nations, Book IV Chapter VIII, v. ii, p. 660, para. 49.
Again, from the Father of Capitalist thought: 
“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.”
-Adam Smith, The Wealth Of Nations, Book I, Chapter II, pp. 26-7, para 12.
In other words, China is going to do what is good for China and America is going to do what is good for America. Don’t be surprised when the pupil tries to snatch the pebble from the master’s hand.”
Davis Blair’s post contains two direct quotations from Adam Smith’s Wealth Of Nations and neither quotation is appropriate to the context in which Davis Blair uses them. 
His post is about two producers, IBM and its customer, Huawei, both exceptionally large corporations in the multi-million dollar turnover range.
By no stretch of the imagination can Huawei be considered as a consumer within Adam Smith’s paragraph where he attacks 18th-century governments for responding to the needs of producers for anti-combination laws applying to their employees but not themselves, such a tariff protection, prohibitions, and laws against workers collectively seeking wage rises.  Huawei employs thousands of workers; it is not an employee itself.
The second quotation is about the daily transactions between shopkeepers and their customers and part of a discussion about bargaining.  It too is widely misunderstood.  It is not about self-interested “selfishness” but about the bargaining process by which each party mediates their self-interest/self love to arrive at a mutually satisfactory price for one party obtaining their dinner and the other parties selling their ingredients at the mutually acceptable price. If either party tries to cajole the other to pay their opening price and makes no move to adjust their demands towards a mutually acceptable price, the shopkeepers would not sell their produce and the shoppers would not buy the produce.
Adam Smith was not “the Father of Capitalist thought”.  He was a moral philosopher who described society as he saw it and the people within it who behaved in certain ways.   He never knew the word “capitalism” (it was not invented until 1854).
Davis Blair ought not to blame Adam Smith for the trade relations between IBM and Huawei.

Monday, October 15, 2012

When Theology Takes Over Economics

J. Jasper posts a blog (with Z. Brown) with the defiant title of The Invisible Hand Still Exists Economics Beyond the Textbook”  HERE  
Jasper, an aspiring economist at Samford University (a private Southern Baptist institution) interested in a career in Finance, writes:
One of the major reasons I started this blog was so that people could go to a place where the economy and world news is discussed and summarized. I wanted to express the world of opinions and make them available for everyone. In my opinion I was guided by the Invisible Hand to start a blog that made everything make sense.
Jasper's post comes complete with a daily bibliography of his regular reading, viewing and listening to assorted podcasts.  I am sure Jasper is very bright and artiulate. He must also be a busy bee of a student if he attends classes, reads his textbooks and his and views his podcasts listed in his daily biblio.
However, I hope if Jasper ever gets into finance after Samford, he sticks to risking his own money because if he believes there such a disembodied entity as “an invisible hand”, then he does not know the difference between a figure of speech, such as a metaphor, and a noun.  There is only so many times that he can claim he made money because of was guided the "invisible hand" and lost it too because he was "misguided" by the same or another  "invisible hand".  His losing customers will be driven to say: "Stuff the invisible hand! We pay you to choose when to buy and when to sell in visible markets and not your fantasy nonsense of being guided by an invisible hand".

Tuesday, October 09, 2012

How Edinburgh Changed the World

My review of James Buchan’s excellent “Capital of the Mind – How Edinburgh Changed the World”, Edinburgh, Birlinn, 2007 (Paperback) is available Here  published by Think Scotland (a right-of-centre Think Tank, to which I am loosely associated).
THIS IS A REMARKABLY good read. Specialist historians and general readers alike will drive much pleasure from James Buchan’s excellent ability to cover a constant stream of interesting facts about the many men and women who parade en masse through its eleven chapters, seeped in their contextual relevance.
Buchan’s account, supported by a scholar’s dream of 73 excellent pages of source notes, might also change the images held by readers of the Scottish Enlightenment, which Buchan asserts changed “the world”. That world, and Edinburgh, certainly changed in the more than two hundred years since its colourful personalities walked, talked, and played their parts, big and small, in the streets of “Auld Reekie” and in its hinterland.” …
...“Buchan’s account of perhaps Edinburgh’s most enduring direct contribution to the world lay in its historic creation and cumulative advances of medical education and treatment. This was where the combination of academic initiative and purposeful education brought most immediate and lasting benefit to the public. Typically, it was no straight path to general health provision. Much of Edinburgh’s medical history is still overshadowed in the scandals of Burke and Hare, and a myriad of other body snatchers, driven, it must be noted, by the need of cadavers for teaching human anatomy to scores of European students. …
...Buchan focuses on the real meaning of Enlightenment, beyond deep philosophy and growing consumerism. Those interested in daily politics should appreciate why creating something new and lastingly worthwhile is knife-edged frustrating. The basic impulse is a thirst for knowledge, which Edinburgh provided in its unique way. Then there is seed finance from private and charitable sources and the manic dedication of a few individuals. Many Enlightenment figures played their roles, including Joseph Black (carbon dioxide), John Lind (scurvy), and William Cullen (medical training)...
... As Buchan notes in his Prologue: “the men of the Enlightenment were the first intellectual celebrities of the modern world, as famous for their mental boldness as for their bizarre habits and spotless moral characters.” His “Capital of the Mind” shows in captivating detail how so much more, they, their compatriots, and their City contributed for the most part of their Enlightened century.”
Follow the link to read it all.  Let me know what you think.

I'll Keep My Two Cents

Thomas L. Knapp, Senior News Analyst at the Center for a Stateless Society ( posts in The Deming Headlight on “Romney’s ‘Free Economy” HERE 
Two Cents”
“Not to be facile: There's more regulation in a free economy than Adam Smith's beautiful and useful "Invisible Hand" metaphor might indicate as a superficial assessment. But regulation in a free economy is continuously emergent and multi-variably contingent, shaped by a distributed and networked aggregate of voluntary interactions, not by political edict. It's a beautiful thing (see Kevin Carson's The Desktop Regulatory State for more information on it). Non-government regulation produces a continuously improving quality of life for market actors.
Political government and its regulatory schemes don't just impede that process, they seek to freeze it in place, in favor of whichever market actors happen to be on top at the moment (or, as in the case of the "too big too fail" banks, find themselves hanging from a cliff and reaching up for a hand from their politically connected friends).
Hence Romney's obvious horror at the notion of "people opening up banks ... in their garage and making loans." He's not interested in a "free economy." He's interested in proving himself a worthy servant of the existing un-free economy's current masters.
Whatever Knapp’s piece is about I find the remark that “Adam Smith's beautiful and useful ‘Invisible Hand’ metaphor might indicate” something superficial as strange, if not daft.  Metaphors have an ‘object’ – what is the object of in this case?
It can’t be regulations, as they have no connection to Adam Smith’s “beautiful and useful ‘Invisible Hand’ metaphor”. 
How does “an invisible hand” describe regulations in a “striking and more interesting manner”?  In the two cases of Smith’s use of the “beautiful and useful invisible hand metaphor", their objects were, respectively, the absolute imperative leading “proud and unfeeling landlords” to provide food from his crops to those who laboured on his land (Moral Sentiments) and the insecurity felt by some merchants to sending their capital out of their sight abroad, leading them to prefer to invest in the “domestic industry” instead (Wealth Of Nations).  The metaphor was about what cannot be seen in the minds and emotions of those affected who, in consequence, act in a certain manner. 
But in the case of visible regulations, how does the metaphor of an “invisible hand” serve to “describe in a striking and more interesting manner” (Smith, “Lectures in Rhetoric and Belles Lettres” (1763) the consequential actions of those affected by the visible regulations?  Nobody is led to act by non-existing invisible regulations!  If the regulations exist they are always visible.
Clearly, Smith’s use of the invisible hand metaphor does not apply, and neither does it exist when used in this case by Thomas L. Knapp.  I think I’ll keep my “two cents”.
NB: I have no interest in what any candidate in any election in any foreign country is interested in proving.