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Invisible Hands And Visible Consequences
How markets operate to give us what we want, and why that’s a huge problem
Most people are familiar with the phrase “the invisible hand of the free market” yet few have ever read Adam Smith’s seminal work The Wealth of Nations. That’s a shame, because it’s a fascinating book. Smith was one of the first economists, and perhaps the very first to consider the nature of what we mean when we talk about value. He was also one of the very first to understand that human nature plays a powerful role in all aspects of human life. By way of contrast, the far more famous Karl Marx completely failed to understand value and was equally oblivious of the impact of human nature. This is why societies based on Marx’s ideas have universally failed while over the last two hundred years the West has grown prosperous by enabling markets to operate, at least to a degree.
Yet markets have now led us into a death spiral and the USA is leading the way when it comes to rotting from the inside and beginning to collapse. So we need to ask (i) how is it that markets can be far more successful at delivering what is desired than any attempt at top-down planning, and (ii) why do the most efficient markets ultimately lead us toward the abyss?
