The Philosophy of Economics - The Invisible Hand
Thursday, September 18th, 2008Ah, the invisible hand, what a fine, dark metaphor to match these dark times. Adam Smith in The Wealth of Nations: The individual who “intends only his own gain is led by an invisible hand to promote an end which was no part of his intention.”
Wednesday’s New York Times editorial “Mr. McCain and the Economy” criticizes McCain on several fronts. 1. His claim that the economy is fundamentally sound, despite the latest cataclysms. 2. His clarification that what he meant by “fundamentally sound” was that he “believed in American workers.” and 3. His broadside that any blame that could fall fell surely on Wall Street’s “unbridled corruption and greed.”
“The crisis on Wall Street is fundamentally a failure to do the things that temper, detect and punish corruption and greed. It was a failure to police the markets, to enforce rules, to heed and sound warnings and expose questionable products and practices,” says the editorial, and with a flick of the wrist ends with a call to McCain to proffer new solutions or approaches that might correct the problems.
McCain, we’ve heard and he admits, suffers from a fundamental lack of interest in things financial (he doesn’t recall how many properties he and his wife own — eight). This is an unfortunate quality in the prospective leader of a country, especially during economic upheavals.
The invisible hand has another meaning here, too. McCain, intent on gaining the presidency is led by the invisible hand of greed in the Republican power-makers. It is no part of McCain’s intention to lead the country into financial disarray, to risk further dismantling of what was, prior to Bush’s presidency, a remarkably strong economy.
Economics is a complex subject. Even the experts don’t understand how economies really work. They are too vast, multi-faceted and irrational.
This last is an incredibly important point. Emotion, fear, mania, addiction, overoptimism all play significant roles in the way the economy heaves and rolls. The concept and model of a completely free market fails in the real world on this basis alone.
Subprime mortgages and the resulting current woes illustrate the second point about the illusion of the completely free market. A free market, a market without restraint, is free to collapse. If we want to prevent this (and who would argue that it’s not in the nation’s best interests to prevent occasional collapse of the economy) someone outside the market needs to be monitoring, reviewing and, if necessary, regulating such things as new financial instruments.
The last problem with the notion of a completely free market is the dangerous relationship with the seat of government. Large, wealthy corporations have deep pockets with which to influence government policy. And, worse yet, if agents of those corporations influence government thinking, policy and strategy (think Rove and Cheney) the power of government will exert an ultimately skewed and even destabilizing influence on the market.
This is exactly what has been happening, as the Times editorial points out: “The disconnect between work and reward has been especially acute during the Bush years, as workers’ incomes fell while corporate profits, which flow to investors and company executives, ballooned. For workers, that is a fundamental flaw in today’s economy. It is grounded in policies like a chronically inadequate minimum wage and an increasingly unprogressive tax system, for which Mr. McCain offers no alternatives.”
The free market is a nice idea, a useful model to illustrate one of the forces at work in an economy. But we should not forget that the invisible hand bends and shapes the market according to the will that wields it.
Related posts from around the Web:
Senate Democrats Discuss Bush-McCain Economic Policies - Senators Boxer, Stabenow, and Menendez discuss how the turmoil on Wall Street is a direct legacy of Bush-McCain economic policies that have failed this nation for eight years. Refusing to police lenders and neglecting to protect …
McCain’s Economic Solution: Hemorrhage More Money - … GOP nominee for his statement this morning — which they asserted was an announcement of support for $25 billion in government loans to the auto industry. So there we have it. McCain’s solution to our terrifyingly failing economy? …
McCain Follows Obama With Direct Economic Ad (VIDEO) - “You, the American workers, are the best in the world,” says McCain. “But your economic security has been put at risk by the greed of Wall Street. That’s unacceptable. My opponent’s only solutions are talk and taxes. …










And all of this relates to mirrors how? I’m getting there.
So if I imagine for a moment that I’m Pinky Dinky Doo and that Mike Bloomberg is offering a prize for the person who can come up with a device that would help people quit smoking, I’d say that he should use some of the fund to distribute hand mirrors to smokers or their loved ones so that they can watch themselves puffing away day and night and hacking up gunk first thing in the morning. Just an idea.
“Art is science made clear.”
I worked so hard yesterday to repress this awareness. I wanted to laud the New Yorker and Barry Blitt. But as I scrolled through the New Yorker cover cartoons seeking out examples of the same kind of abrasive satire I knew deep down that I wouldn’t find anything quite like the Obama cover.
If the New Yorker in its cover cartoon had, as does the Onion in its copy, a history of satirical lampoon with no holds barred, the cartoon would make more sense; its art would be science made clear. But given the absence of this history, the cartoon’s immediate psychological impact tends to muddy its message.
The New Yorker has a long history of offending people with its notoriously tasteless and offensive output of low-brow hackery.
Satire has no place in an enlightened society. After all, to appreciate satire one must simultaneously understand the direct impact of the satirical object as well as its indirect object. Surely we shouldn’t be expected to hold opposing or divergent concepts in our minds at one time, that’s just barbaric! This is one nation under god, godamnit!
Republican opposer — John McCain — no stranger himself to satire, limped nimbly to Obama’s support, declaring: “New York can go take a hike! Oh, wait a minute, there aren’t any decent hiking trails around New York. Come to think of it, the only place you can even safely fire your gun in New York is from the roof of a New York City housing project, and who would want to set foot in one of those places…”
So, when you get your hands of a copy of the current New Yorker, be sure to set it on fire and toss it into the grate as quickly as you can. At least, tear off the cover and set fire to that… we’ll decide later what to do with the rest of it.

Contrast this with the assertion of Frank Herbert’s son that his father didn’t finish college because he took only to the courses that interested him, forgoing required classes. Herbert worked at writing for many years before achieving success, relying on his wife’s income to support them. He submitted his landmark science fiction work — Dune — to 20 publishers before it was picked up for publication by a smallish press.
On Obama’s political promise and compromise, Kripalu’s spiritual economics, and a country’s declared intent.
“What are the needs of the market, and what are the needs of society? What we’re looking at is what will someone pay to take a vacation to do.†So says Ila Sarley, president of 
This isn’t necessarily a failure, nor a position to lament. Independence is always in tension with interdependence. We exist in a universe in which all things fundamentally result from different arrangements and forms of energy bound together in a single universal instance of space and time.
Using structural and functional brain imaging, scientists now have unprecedented insight into the mechanisms of thought. Writing in the Public Library of Science, 
Interrogation experts should take note. If you want to extract an honest answer, break out the Sodoku puzzles rather than the water buckets and manacles.


Not surprisingly, Obama wishes to steer the campaign away from a contest over who is the more patriotic. He’s smart enough to know that patriotism is a double-edged sword, and principled enough to want to avoid hollow pledges of undying allegiance to the idea of a country. McCain, the ultimate ironist, knows that he will always win any such contest, not just because of his war record, but also because he can claim undying patriotism with sufficient earnestness to convince those who care.
Is Robert Mugabe patriotic for defining Zimbabwe and constraining it to his definition