Myths Of Our Economy: There Is An Invisible Hand Above The Market
There most certainly is NOT!! It baffles me time and time again how many plain lies and misconceptions are deeply ingrained in our collective consciousness. Let's go look together for this magical, equilibrium creating hand...
Adam Smith. source: Foundation for Economic Education
If I want to know what this "invisible hand" is, I look for it on Google and type "what is the invisible hand". Affter the obligatory Wikipedia and Investopedia results, the first relevant hit on number 3 is an article by The Economic Times, and it's just what I'm looking for. Let's see what it says:
Definition: The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand.
Well, that's a good start: it is exactly what everybody tells me when talking about the markets failing. They blame it on too much government intervention; if they just "let the market do it's work" and "don't hinder free trade with taxation or trade regulations", everybody will get what's truly theirs. Just let demand and supply do their work, and the equilibrium would kick in as if by magic...
This is so sad in my mind: how could anyone believe this? This market we're talking about is based on ownership and that in itself ends the "free" portion of this market. There has never been and there will never be a free market, or a free (anarchist) society, as regulations begin with ownership! Ownership itself is a legal construct, for Peet's sake...
But that's not even the point here. The article continues:
Description: The phrase invisible hand was introduced by Adam Smith in his book 'The Wealth of Nations'. He assumed that an economy can work well in a free market scenario where everyone will work for his/her own interest.
He explained that an economy will comparatively work and function well if the government will leave people alone to buy and sell freely among themselves.
Does this sound familiar? I thought so. But why do you believe it? Why do you believe that in a system that's based on the increasing of private ownership through competing with only one's own interests in mind, there will somehow be any type of balance? I can only see that the most callous greedy egotistical bastards will be most successful in this system. It can only end in a plutocracy, as it has in our times as well.
I say "as well" because all great empires in the past died on the same note, and they all professed their own version of capitalism. You all know the saying "history is written by the victors", right? And you all understand this to be factual, right..? Right? Okay, well then this must also be true for that one, everlasting war, the war between the classes. Not only the history about the clashes between peoples and nations (which also really are just clashes between the uppermost class of one nation trying to get something from the uppermost class of another nation), but all of our histories have been written by those victors.
I said it before, and I'll repeat it here: no conspiracy theories are needed to explain the deplorable state of justice and humanity in the world today; it's all that's allowed by the ruling plutocracy. Forget the Illuminati and the infamous family names that are tied to them: they may be true, they may not be true, but they're ultimately unnecessary and detract from the simple causes, open for anyone to see, in the economy.
source: ConservationBytes.com
Back to the matter at hand. This article is a prime example of general believe, of today's market-dogma. But it is a lie. Smith did not introduce The Invisible Hand in "The Wealth of Nations", the free-market bible. He first mentioned the phrase in a much earlier book, "The Theory of Moral Sentiments", in which he most certainly did not describe it as some unseen force that guides markets.
The book starts with this:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it. Of this kind is pity or compassion, the emotion we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrows of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous or the humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.
Also this book is known as "the ethical, philosophical, psychological, and methodological underpinnings to Smith's later works, including The Wealth of Nations (1776).". To be clear: Smith believed that every man has empathy and acts upon that. That's all this is saying, and it is the basis for what he had to say about the invisible hand later in this book and later books:
[The rich] consume little more than the poor, and in spite of their natural selfishness and rapacity…they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.
Now, just to make sure you know where the grandfather of capitalism really came from, an excerpt from The Adam Smith Institute:
The Theory Of Moral Sentiments was a real scientific breakthrough. It shows that our moral ideas and actions are a product of our very nature as social creatures. It argues that this social psychology is a better guide to moral action than is reason. It identifies the basic rules of prudence and justice that are needed for society to survive, and explains the additional, beneficent, actions that enable it to flourish.
Self-interest and sympathy. As individuals, we have a natural tendency to look after ourselves. That is merely prudence. And yet as social creatures, explains Smith, we are also endowed with a natural sympathy – today we would say empathy – towards others. When we see others distressed or happy, we feel for them – albeit less strongly. Likewise, others seek our empathy and feel for us. When their feelings are particularly strong, empathy prompts them to restrain their emotions so as to bring them into line with our, less intense reactions. Gradually, as we grow from childhood to adulthood, we each learn what is and is not acceptable to other people. Morality stems from our social nature.
See, what's happened there? This Invisible Hand, he attributed to the behavior of the owners of the means of production; they would be guided by this hand, not the markets. And the guidance he's talking about is simply an appeal to their moral values. Well... Did this appeal come into realization? Are our richest acting in such a way that indicates their moral need to provide for all?
Also, realize that Smith was very well aware of all the other dangers that came with capitalist fundamentals like "the division of labor"; he warned us that large parts of society would get dumb down by this and that this in turn would damage the workings of any democracy. It's funny: Smith and Marx agreed on so many things, but the Plutocrats manage to make us believe only in their disagreements and, like in any war-propaganda, inflated both sides. Divide and Rule still works...
"Karl Marx and Adam Smith – each in his own time – both considered that it is the workers not the bosses/capitalists who produce value." source: Links International Journal of Socialist Renewal
As The Invisible Hand is based on an untruthful interpretation of Adam Smith's brilliant writing, so is the notion that "greed is good" based on a complete misinterpretation of Darwin's "survival of the fittest"... But this rant, and is is a rant, as I'm getting sick and tired of people praising the system that's keeping them down, has gone on long enough. Like I said, I'm in very busy times right now, so can't always properly prepare stuff...
If you made it this far though, I'm grateful, as always, for your attention and continued support. Please feel free to discuss in the comments section; I'll honestly try to respond to all of them, but cannot make any promises this time. I can only hope you're willing to forgive me if I can't...
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I feel in many ways Voltairine de Cleyre's anarchism, which might today encompass 'anarchism without adjectives', is a possible direction; considering kinks in implementation. I do believe enlightened capitalism has a place in a free world. Often I see the best natural form of natures organization in cellular systematic. Groups that naturally agree economize their group how they feel most happy. Then those groups trade freely. So there may be communes, anarchocapitalist villages, socialistic cities, small democratic republic towns, etc. merging where they are happy. There's not even a need to trade or distribute between them, unless they want to, by whatever way they want to. Many feel its difficult in this way to define agreed upon goals and strategy to manifest such an outcome. I however see many options for strategy- none which involve top down declaration. For instance, if people agreed to agree to letting go of top down control of a movement. A grassroots goal could be redirection of personal spending habits, scaling over a time.
Just as an example as something we did in my local town concerning a boycott of a major shopping chain. We worked to withdraw spending from that chain and redirected spending to a suitable producer. That store didn't just go out of business, but its headquarters got shut down too.
Now let me ask you, what would happen if every anarch-whatever, agreed to only spend at local or small business? That's hard at first but let's say 5% a year, so year 1 5%, 2 10%, and on and on, which gives everyone enough time in their own time to get to 100% and find resources for all their needs - possibly even among each other. Well, that could effectively put Walmart out of business, which would effect the market, etc. It requires no organization, just a simply manifest to "vote with your dollar" mindfully.
Some things are found impossible to obtain it seems, but there in lay the beauty of capitalism; in other formats - we couldn't just start a decentralized local internet company without the states permission.
And that word rubs me wrong, permission implies submission. And there's many that argue no no no because of the justification of the greater good but if the collective is an authority then many people can still experience oppression just in another way. Imagine if the collective decided one day it's wrong to be white, skinny, creative, smart, or whatever else- on a whim. That is totally actually possible and has happened. And why I feel more apt to retain a sense of individualism at this scale.
I know, boundaries don't exist at the quantum level but at the Newtonian level, there must always be an opportunity for disruption- or it's but replacing one type of power and authority with another.
Thanks for checking this out, @omitaylor :-) And thanks for brainstorming this topic with me! <3
You know this is impossible, right? And you can see how this one sentence encapsulates the "irrational fear" for "the state" I mention so often in discussions about this failing economy?
A collective can never decide anything "on a whim". When a collective decides, when a group of individuals decides, they talk about it first. They make sure they all have as much information as is needed for making said decision and weigh pro's and con's for themselves and among themselves and then they all individually weigh in on the decision by casting their vote. This principle, that it's only normal that if you have to live with the consequences of a decision it is logical and fair that you can participate in the decision-making, is called "democracy". In a working democracy that state is you.
The state you fear is what we have now: an undemocratic, corporate owned puppet theater performed by the plutocracy. The plan you offer to slowly saw their pillars from under their feet will never work. I really cannot grasp how one can believe in "voting with dollars" in the first place; what happened to "one man (or woman), one vote"..? You seem to think "one man, a billion votes and many men with no vote" will work better?
As soon as your plan reaches the 10% mark, or whatever percentage the plutocracy will allow, the mom and pop businesses that are sawing on their feet will be bought out. And they'll try to do it behind the scenes too, so you keep thinking for a long while that you're starving the beast when you're actually feeding it. Capitalism is just warfare by other means and false flags are a proven and working tactic.
Now let me ask you, what would happen if we would introduce democracy in the corporations? What if all workers, all managers and all their families are making the decisions about what to produce, where to produce how much to produce in what manner and what to do with the profits, if any? So we won't have a CEO that decides what to do to advance the wealth and well-being of the shareholders, but the collective that really produces value that decides what to do to advance the wealth and well-being of all concerned parties?
You see, there are some things we must not throw away. We don't gain anything by traveling back in time and go full local. The division of labor is the main accelerator of wealth; it's the part Marx admired most about capitalism and the part that Smith worried about most. But Smiths main objections fall away automatically when not none capitalist, but all concerned make the decisions.
Don't fear the state, make it yours.
Thanks for your feedback here. Much appreciated. I fear no state. And that may be a logical presumption and something I see many presume when we speak of avoidance of an obearing state. I fear very little (not even death) and no one — literally, and that's no exaggeration. Why is a long story, but I assure you to trust me on this much.
I have however experienced democratics, and 51% outweigh the 49% and that often results in defectors and division. No it isn't always an imaginary enemy to influence or brainwash, or divide and conquer or control; often it is our own preferences. Simple preferences too.
I feel likewise, a satisfactory democracy is about as possible as a collective concious decision. Why? Because mob rule is only fun when you're in the mob. The moment the majority decides that they don't like "people like you" anymore — that's when the decision is regretful.
The old school congressional style of decision making where everyone deliberates until agreement or nobody leaves is really the most happy in choice; however takes a long time and often leads to stalling, indecision, people choosing out of haste, or manipulation. What we cannot rid the world of is self-interest and I do not believe we should. Even the most passive and communal of us, even those of us with no boundaries who are complete doormats and masochists; cannot escape self-interest. That interest may not outweigh others, but it exists. And without appeal, leads to resentment and worse. Self-interest is core to being a living being.
In my opinion, collective decision making begins with one abitious person willing to do it first; and another few people willing to do it too. It's like dancing at a party. When you try to structure people to do something, even rule them to do something, there will be many detractors. But if the music is good and a few people don't mind being the first people dancing, you find most of the room dances of their own free will — because almost all of them want to.
So I fear no state. I also fear no community, although I admit I prefer isolation; and interacting when desired. What we have now is corporatism in the USA. And what most are expecting or demanding is social controls that are technically toxic pyschologically.
And you misunderstand my strategy. From a government standpoint, let's say in the USA, I strongly believe in removing the electoral college and removing lifelong revoting terms of senators and representatives. Like presidents, I believe they are better to have one or two terms. And I would shrink the entire government 80%. But IN ADDITION, I believe voting with the dollar is a poweful initative, as well as localism in general- yes I do. Under the circusmtances I think this, because it's circumstancial strategy. I wouldn't suggest that for another country where their circumstances were not these or as a cookie cutter decision.
Billionaires don't shop at Walmart as consumers. Only the middle class and below shop at these megacorps. Only middle class and below smoke cartons of cigs. Only middle class and below eat McDonalds. Let me retract, but at least 90% so, and megacorps and their owners aren't going to do any business without the consumers and employees. In localism, people are producers and consumers.
I realize capitalism can be thought of as warlike. It's also "love like." It's engagement based economy; and sometimes it's well willed and sometimes it's not. You speak on capitalism as if its a ghost, a thing unto itself that it iself is doing. er go, "Capitalism will put mom and pop out of business." While I realize that nefarious tactics are used to end localism, I see Capitalism as volnerable, with linch pins everywhere- and that's good to me. It's not an indistructible force against the people. It's also a stairway up if you look at it that way as well; a place from where more ability to serve is empowered.
Again we return to the issue of corruption - not structure. If anyone, @eftnow often speaks on mindset. If we approach matters from the 1800's points of views with terrible technology and even worse scientific understanding, we'll repeat our mistakes. Moreover, viewing capitalism as threatening and oppressive vs insecure and opportunity is victim mindset. It's the "Cops are bullies because they abuse power and are hungry power fiends" instead of saying, "Cops are bullies when they're ignorant and terrified of US."
I'm further concerned that many anarchists are not mentally tactical. Rather, following serves many of us- just rather the hoard than a dictator. Perhaps it's my alpha tendencies, but I often "smell" prey-mentality; and am not surprised so many are victims and not victors.
I have nothing against your proposal of developing co-op corporations. I grew up in co-op based housing. My family and 10 others bought a building. And I also worked at a co-op for my second job, a food market that was shareholder owned and operated. But I don't think that is superior to localism. Although I think it's perfectly harmonious alongside. Neither do I believe in forcing already established businesses to become co-ops or go out of business. I would not want my liberty as a person OR business revoked. Although where business form is concerned, I do agree that the next logical step beyond LLC would be well to be co-op, not corporation-as-personhood. But I digress... It's about causing corporate accountability through consumer based regulation. We will work for you and take your money, but we will never ever spend it back to you unless you are spending it forward and completing "the perpetual loop."
I don't fear a state. I already know my power within it and within myself. I only assert that I own me. And hope others know their own power within them and own themselves with as much self-respect. Doesn't matter to me if it's money power, mob power, mind power.
Thanks for your response; I truly appreciate this. And I do trust you on your word when you say you have no fear. I don't either ;-)
We will not convince each other, at least not here and now ;-) I experience true democracy every day, it's a three person democracy mostly and it's called "my family". The way I see life in large communities (and there simply is no other way than living in a community) is the same as in this small community. Democracy is wrongfully understood as some political technique or system: it's a cultural thing and it starts in the family. We discuss and we decide together. There's just no other way about it.
Talking about capitalism as a separate entity may confuse you. Let me say this: how often have you heard or read in the news something like "That was a good proposal from X or Y, but it will regrettably not pass because the markets won't like it" or, "X or Y proposal could be beneficial for .... but the Dow Jones would object". Not a separate entity? Not placed above any political decision-making? I see that differently, I'm afraid. And that's not victim-hood nor accusing anyone of being guilty of whatever perceived conspiracy: it's just the facts of any economic model that's based on personal gains only.
At least, that's how I see it after having 40 odd years to think about it, seeing the plutocracy gain power, living poor, living rich and having experience with two obscenely rich persons, one of them being family, the other one of my best friends. I don't blame them for anything. I don't blame the billionaires for anything: they weren't born the sociopaths they have become after a life long under iron capitalist rule.
We won't agree on these points, but that's okay in my book: these conversations I like most because there actually is something to discuss :-) Thank you so much again; I truly do admire the way you talk about these things without "losing your cool". It's always kinda tricky to discuss politics or religion online as so many people seem to to feel attacked personally way too easy when discussing these broad subjects. And I'm sure we will pick this up again sometime in the future. I'm proud to have been given the chance to get to know you, @omitaylor; you're a beautiful person and a great discussion-partner! :-)
Yes yes indeed. And of course we won't likely agree because we're both rebellious. Cheers. HAHA
That was a fascinating little rant there. I really liked the part about how Marx and Smith are in agreement on many things, yet we're told to believe that they were polar opposites.
I am also reminded of this little passage by Jefferson (I know, I've quoted him recently before but this time it's a different part that I'd like to emphasize):
See original here. Emphasis mine. Jefferson was at the least, utilitarian, and I'm not so sure he was a capitalist based on his statement above.
Your article provides a brief insight into what an anarchist thinks about the notion of property and I found it useful for at least that.
But there was one more thing that came to mind. "Stake based voting". That is what we have here in Steemit, but outside of Steemit, the perversion of the United States is a reflection of what stake based voting does to society. I'ts that plutocracy, you speak of. Some people say we need to get big money out of politics (think Larry Lessig), as an acknowledgement that stake based voting doesn't work.
I will admit to being new to anarchy and that I want to learn more. So far, I see anarchy as the antithesis to plutocracy and concentrations of power. I didn't mean to write such a long comment, but your article was inspiring.
Write on.
Thanks so much for this wonderful addition, @digitalfirehose :-) And I agree that not only Steemit, but no cryptocurrency will "save us" from the dangers both Marx and Smith warned about. I'm really honored by the effort you put in this well thought out and excellently worded response. Thanks again, my friend! :-)
You're welcome, sir. Have a fine day! :)
Such a great and underrated article!
The greedy bastards continue to justify and live up to Darwinism, blame the poor for their misery. Making them believe that 'if they can try, they can make it'. Some people have no control over their circumstances as they were brought upon them by the ruling few, alpha males, and strong forces of the society. Yes, it does suck that people continue to defend this system that enslaves the majority. The fact that the few can live and sleep while living off/becoming richer at the expense of others just shows there is no humanity in this system.
you're absolutely right: social Darwinism is one of the ugliest ideologies to come out of the misreading and misunderstanding of the theory of evolution. Thanks so much, @diabolika, for sharing your thoughts! :-)
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