Economy

walkingman

(8,085 posts) Sun Jul 7, 2024, 04:25 PM Jul 7

There is no "Invisible Hand"

Our government and business is still operating under this assumption because it serves the oligarchy to do so.

Adam Smith suggested the invisible hand in an otherwise obscure passage in his Inquiry Into the Nature and Causes of the Wealth of Nations in 1776. He mentioned it only once in the book, while he repeatedly noted situations where “natural liberty” does not work. Let banks charge much more than 5% interest, and they will lend to “prodigals and projectors,” precipitating bubbles and crashes.

Let “people of the same trade” meet, and their conversation turns to “some contrivance to raise prices.” Let market competition continue to drive the division of labor, and it produces workers as “stupid and ignorant as it is possible for a human creature to become.”

https://hbr.org/2012/04/there-is-no-invisible-hand

6 replies

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There is no "Invisible Hand" (Original Post) walkingman Jul 7 OP

Indeed, the hands pulling the strings are quite visible. NT. Voltaire2 Jul 7 #1

The invisible hand has been busy picking our pockets. sop Jul 7 #2

We shall see how invisible it is, gab13by13 Jul 7 #3

Bernanke is a good example of how the Federal Reserve has previously (2008) interpreted walkingman Jul 7 #5

Even in theory, the benefits of capitalism only happen when everyone plays by the rules. unblock Jul 7 #4

Thank you for stating so clearly, thoughts I've had for a long time. CrispyQ Jul 8 #6

Voltaire2

(14,346 posts)

1. Indeed, the hands pulling the strings are quite visible. NT.

Reply to walkingman (Original post)

Sun Jul 7, 2024, 04:31 PM

Jul 7

sop

(11,078 posts)

2. The invisible hand has been busy picking our pockets.

Reply to walkingman (Original post)

Sun Jul 7, 2024, 04:48 PM

Jul 7

gab13by13

(23,789 posts)

3. We shall see how invisible it is,

Reply to walkingman (Original post)

Sun Jul 7, 2024, 05:01 PM

Jul 7

Will Jerome lower interest rates in September or wait until after the election? I am betting after the election.

walkingman

(8,085 posts)

5. Bernanke is a good example of how the Federal Reserve has previously (2008) interpreted

Reply to gab13by13 (Reply #3)

Sun Jul 7, 2024, 05:42 PM

Jul 7

their actions to be a part of the "invisible hand" based on market-based incentives (hedge funds and private interests) when in reality they have removed any risk from bad actors.

So lowering interest rates should theoretically not be political - your right it will be interesting to see what Chairman Powell does.

Has everything turned political? .....the invisible hand does not really exist.

unblock

(53,788 posts)

4. Even in theory, the benefits of capitalism only happen when everyone plays by the rules.

Reply to walkingman (Original post)

Sun Jul 7, 2024, 05:22 PM

Jul 7

Regulation is not interference with true capitalism. Regulation is an integral part of capitalism.

Capitalism works well only when trusts and monopolies are prevented so prices reflect market forces, advertising is truthful so people can make rational decisions, externalities (such as pollution) are prevented so that third parties not involved in a transaction don't pay a price for someone else's trade, etc.

Without such regulation, it's not true capitalism, it's economic anarchy, and it becomes more of a wealth extraction game rather than a beneficial allocation of scarce resources.

An economy without regulation makes as much sense as football without officials. Sure, the blow a call every now ima d then, but football would be pointless and unwatchable without refs.

CrispyQ

(37,512 posts)

6. Thank you for stating so clearly, thoughts I've had for a long time.

Reply to unblock (Reply #4)

Mon Jul 8, 2024, 09:12 AM

Jul 8

Also, corporations need to be accountable to their stakeholders more than their shareholders & employees should own a share of the company & have at least one representative on the board.

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