Forums:
In his seminal economic treatise Wealth of Nations, Adam Smith laid the philosophical groundwork for the concept of "an invisible hand," which was co-opted into "the invisible hand of the market" by later neoclassical economists. Smith believed that an individual rationally pursuing his own self-interest, as if led by an invisible hand, would unintentionally promote the greater good of society. The neoclassicists thought that the invisible hand of the market forces of supply and demand, and self-interested maximization of profit were the most efficient regulators and allocators of resources. However, the idea that markets could best regulate themselves was never propounded by Smith, who in fact advocated government intervention in the economy insofar that it could prevent abuse and spur competition.
Unfettered markets do not always lead to efficient outcomes because information is asymmetric; markets are imperfect; and financial actors can be irrational. According to Nobel Prize-winning economist and former Chief Economist of the World Bank Joseph Stiglitz, "I don't think today anybody would claim that the pursuit of self-interest by the bankers, which is sometimes called greed, has led to the well-being of all of society."
Economists like Alan Greenspan who have hi-jacked Adam Smith to advocate deregulation of the financial markets have committed a great laissez-fraud. Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke are aiding and abetting the banking industry in massive corruption. Why is there no return of Glass Steagall? Why is America privatizing profits and subsidizing losses? Where are the prosecutions of Wall Street financiers and government officials responsible for the mess?
Chase CEO Jamie Dimon and Goldman Sachs CEO Lloyd Blankfein have benefitted enormously from the havoc of the 2008 banking crisis, both personally and professionally, but neither has been penalized for their roles in causing it. The banks that were deemed "too big to fail" are now bigger, and their profits, too. De-regulating the market has certainly proved to be profitable... for the circle jerks.
http://www.businessdictionary.com/definition/neoclassical-economics.html
YOUR INSULTING THE LIBERTARIAN GOD, AND I LOVE IT.
Submitted by Weekend Warrior on
Great post. Adam Smith only used words "invisible hand" once in the extremely voluminous Wealth of Nations when describing the basic mechanism of supply and demand. Do you think he knew he was creating a new God?
Do note also Adam Smith was also a big believer in the Labor Theory of Value. What a commie, huh.
Tom Burns, raroof3@gmail.com
Thanks Again
Submitted by Lady Libertine on
Can't quite express how much I love your grasp of the subject, and my arguments! Rationality and logic on comment feeds do exist!
L.L.
It's lame that people who are
Submitted by nobody on
It's lame that people who are into using twn as a Bible don't read it. I think they are really more like marginalists, but the marginalists aren't so interesting as Smith.
And yes, Smith was all about the LTV. Marx adopted the idea from Smith. Marx wasn't a radical for the LTV. He was a radical because of his goal, which was to lead the working people to take over the state and to eliminate private property.
The LTV is actually kind of "old'. It ignores inputs from the earth, like materials and oil.
"Treasury Secretary Tim
Submitted by Mahayana on
"Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke are aiding and abetting the banking industry in massive corruption."
I'm so glad to hear someone else say this. (Any time I have criticized the Federal Reserve on these forums, I have been accused of being a tea party loving Koch supporter). I saw in another post that you said you worked under a Federal Reserve chairman. Is it your view that the entire Federal Reserve is aiding & abetting the banking industry?
Opinions seem to fall to the extreme left with excessive regulation or to the extreme right with absence of any regulation. I don't see why there can't be a happy medium. My opinion of market regulation (and government's role in general) is very much in line with what Abraham Lincoln said:
"The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities."
So yes, people definitely need protection from the "self-interests" of others because it is evident that the intentions of others are not as innocent & pure as some would like to think. Thanks for the posts Lady Libertine. It's nice to see opinion coupled with fact.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves - in their separate, and individual capacities. -Abe
Lincoln
Submitted by Lady Libertine on
I did not work for a Fed Reserve chairman, but studied international finance under a former chairman of the Atlanta Fed Reserve... I don't know that I believe the entire Fed is aiding & abetting the banking industry-- I try to avoid absolutes, but there is definitely systemic corruption.
There are certain industries, such as healthcare, that I believe should not be privately run. This is because of the demonstrated conflict of interest inherent in the system. Thus, your bolded Lincoln quote is apt, and it is precisely my philosophy of government.
Thank you,
L.L.
ADAM SMITH AND ABE LINCOLN.
Submitted by Weekend Warrior on
Interesting quote by Lincoln. If he made it today, Fox News would be quick to characterize him as a socialist with communist leanings.
As for Adam Smith, I so happen to be reading Wealth of Nations right now, though I have been bogged down lately getting through his hundreds of pages analysing European corn prices from the middle ages to the 18th century. Dry reading, to say the least-much worse than the digressions of Victor Hugo. Fortunely, his Labor Theory of Value and his main analysis of the division of labor came in the first part of the book. It is true his devotion to free trade was centered on breaking up "corporations," which, at that time, were local trade monopolies that existed in each city. He was also critical of the British poor laws that forced paupers to stay in their own parish. However, he was not adverse to government's building infrastructure and regulating fair trade. Here is his only mention of the "invisible hand" in Weath of Nations:
“...But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."
"
Tom Burns, raroof3@gmail.com
Aimez-vous d'avoir le pied
Submitted by chaussurenikepas on
Aimez-vous d'avoir le pied sur l'usure de la qualité? Quels types de marques que vous aimez le plus? Eh bien, si vous connaissez la qualité, vous devez avoir entendu parler de Nike .... Nike est une célèbre marque qui offre le pied porte de différentes sortes à travers le monde. Leurs éléments fournis et produits célèbres sont reconnus dans le monde entier et des milliers de gens aiment avoir leurs propres chaussures Nike! huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
huanyutiandi
Pages