The Invisible Hand
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19-02-2011, 03:08 PM
RE: The Invisible Hand
(19-02-2011 12:39 PM)The_observer Wrote:  Didn’t "the invisible hand" cause the world economic crisis of 2008?

No, free market capitalism had nothing to do with what happened. The debts that were rung up and the financial instruments that were created from them and then fraudulently sold were not in any way, shape or form the products of a capitalistic market. The 2008 crash was the result of a very visible hand and the concerted effort of a handful of people who profited from their actions before the crash and then profited again after the crash.

Shackle their minds when they're bent on the cross
When ignorance reigns, life is lost
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20-02-2011, 02:01 AM
RE: The Invisible Hand
I argue that some people do follow the Invisible Hand. They believe that it is an infalible force that makes sure our lives stay on course and that the job of regulating things falls to it, not mortal men.

Hear it from Paul's lips

HERETIC!!!

Anyhoo, whether or not the invisible hand is an actual force that leads people or just a theoretical inevitability of self-interested behaviour, the thing I find interesting is that people have faith in it. They trust in it. They believe it will watch over them and keep them safe. And they believe that they have to behave in specific ways in order to apease it.

Peace and Love and Empathy,

Matt
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20-02-2011, 08:28 AM
RE: The Invisible Hand
Anyone who believes as you describe simple does not understand the concept as set forth by Smith. I do believe in the Invisible Hand as a concept but I don't believe it watches over me or anything like that.

The other thing that gets lost in all discussion of Adam Smith is his first book, "The Theory of Moral Sentiments". Smith believed that market forces and ethical, moral behavior were all part of the same equation and people were guided to act morally because it was in their best interests to do so. And, for people who did not act in their best interests, Smith was ok with laws being in existence to stop them (which is vastly different, btw, then the idea of regulating how a company does business - something Smith never thought was necessary).

The problem, again, is that in our modern economy we have completely divorced the concepts of risk and reward, which means we've separated the ideas of decision and consequence. Once that happened, then all bets were off as to how the market would respond.

Finally, for people who think the Invisible Hand will take care of them, I say again that "Wealth of Nations" are a lot like the bible: many people claim to believe in it but very few of them have actually read it or have a clue as to what it actually says and teaches.

Shackle their minds when they're bent on the cross
When ignorance reigns, life is lost
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20-02-2011, 04:58 PM
RE: The Invisible Hand
(20-02-2011 02:01 AM)Ghost Wrote:  Anyhoo, whether or not the invisible hand is an actual force that leads people or just a theoretical inevitability of self-interested behaviour, the thing I find interesting is that people have faith in it. They trust in it.

By "trust in it", I guess you mean that they act as though it is an inevitable thing? Because I've never met anyone who actually understood economics and who treated the invisible hand as anything more than a consequence of the free-market system.

Quote:They believe it will watch over them and keep them safe. And they believe that they have to behave in specific ways in order to apease it.

Who does this?

"Owl," said Rabbit shortly, "you and I have brains. The others have fluff. If there is any thinking to be done in this Forest - and when I say thinking I mean thinking - you and I must do it."
- A. A. Milne, The House at Pooh Corner
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