The New York Times article"Nobel-winning economist looks beyond the invisible hand," (Oct. 30, page 12) misunderstands Adam Smith, who did not have a "theory of the invisible hand." This is an invention of modern academe.
Smith's used the metaphor of the invisible hand only once in Wealth of Nations. It was never a "theory," but was an illustration of how human motivations could have unintended consequences, which, in the case he was discussing, were, happily, benign consequences. He never made it a general rule that the "individual pursuit of self-interest promotes the greatest good for all."
The pursuit of self-interest also promotes unintended malign consequences. Merchants and manufacturers, wrote Smith, tend to promote monopolies and reductions in supply to raise prices against the interests of consumers. Self-interest does not automatically promote "the greatest good for all." It all depends on the circumstances; hence, Smith did not make the metaphor into a theory.
Anyway, the metaphor was originally Shakespeare's from Macbeth ("thy bloody and invisible hand").
The author of the article distinguishes between absolute and relative performance in the game of hockey. "Absolute" here means what everybody might do (if they are compelled somehow, but otherwise do not), and "relative" means what some individuals might choose to do because they value one outcome (safety) over another (winning).
The distinction is precisely Smith's point precisely: if everybody pursued their own self interest without detriment to anybody else's (a big "if" and one that never escaped Smith's attention) then by doing so everybody would promote "the greatest good for all."
But humans do not play the game this way, neither in society nor in hockey. Smith knew that and never concluded that they would. It may be that this is "the standard presumption in [modern] economics," but it never was a presumption of Smith's Wealth of Nations. So whatever Schelling went "beyond," it was not a turn away from Smith. Schelling's work, more correctly, was a return to Smith's approach.
Gavin Kennedy
Edinburgh, Scotland
President Tsai Ing-wen (蔡英文) in her inaugural address on May 20 firmly said: “We will not accept the Beijing authorities’ use of ‘one country, two systems’ to downgrade Taiwan and undermine the cross-strait status quo.” The Chinese government was not too happy, and later that day, an opinion piece on the Web site of China’s state broadcaster China Central Television said: “While Tsai’s first inaugural address four years ago was read by Beijing as an ‘unfinished answer sheet,’ the one she presented this time was even more below-par.” Speaking to the China Review News Agency, Shanghai Institutes for International Studies vice president
EDITORIAL CARTOON
Affected by the spread of the COVID-19 pandemic, many countries have implemented disease prevention measures such as city lockdowns, factory closures, travel restrictions and border controls. These resulted in slowing economic activitiy and dwindling global trade, which have negatively affected Taiwan’s export-reliant economy. Consequently, the Directorate-General of Budget, Accounting and Statistics (DGBAS) last week revised downward its economic growth forecast for Taiwan for the second time this year. The DGBAS on Thursday predicted the nation’s GDP would expand 1.67 percent this year. The agency’s new forecast is lower than the 2.37 percent it estimated in February, and weaker than Taiwan’s economic
French firm DCI-DESCO in April won a bid to upgrade Taiwan’s Lafayette frigates, which has strained ties between China and France. In 1991, France sold Taiwan six Lafayette frigates and in 1992 sold it 60 Mirage 2000 fighter jets. To prevent arms sales between the nations, China negotiated an agreement with France and in 1994 in a joint statement, France promised that there would be no future arms sales to Taiwan. From China’s point of view, the DCI-DESCO deal constitutes a breach of the agreement, but the French stance is that it is not selling Taiwan new weapons, but instead providing a
RSS