Beware false sightings of Adam Smith's invisible hand

[CHIMO]

In the Oscar-winning documentary about the credit crunch, Inside Job, writer director Charles Ferguson spares some of his most vitriolic criticism for Ivy League free market economists. These US academics, argues Ferguson, gave Wall Street banks like JP Morgan and Goldman Sachs and their rightwing politicians on Capitol Hill the intellectual support during the 1990s for a catastrophic bonfire of regulations on the financial sector. Let the invisible hand do the job, said the Harvard, Yale and Chicago school professors.

Their economic philosophy was revealed in a series of interviews by Ferguson who filmed them arguing that a free market should be left to rule without a government hand on the tiller or taxes that distort economic behaviour. The market, they said, propels business people to conduct a relentless search for profit and produce economic goods that benefit all.

The invisible hand releases such a flurry of activity that economic goods trickle down to labour, despite the concern of unions that from those who have first claim on them, the capitalists, will hoard their gains.

Conflating free market theories with utilitarianism, these academics appeared to argue that allowing a free-for-all would bring the greatest benefit to the largest number of people.

http://www.guardian.co.uk/commentisfree/2011/oct/07/economics-invisible-hand-adam-smith

[eppur_se_muova]

1. A market without restraints would be like a hockey game without a referee ...

i.e., not pretty, and there could be only one survivor.