The Flaw Of The Invisible Hand

Introductions to economics usually start with gushing tales about the magic of the free market. It is usually stated that the free market allows everyone to get the best quality goods at the cheapest prices. The magical invisible hand guides everyone to the best place without any unnecessary government intervention. Below is a link to a video typical of the kind. (I’ll ignore for the moment that it completely misrepresents what Adam Smith said). Its short and simple, but it is a simple argument. This is the typical free market argument with its claim that left alone it will bring the best world for everyone. So in the video it compares two bakers offering bread and the consumer chooses either … Continue reading “The Flaw Of The Invisible Hand”

December 29, 2012EconomicsAsymmetric Information, Competition, Conspicuous Consumption, Culture, Economic Theory, Economics, Externality, Fashion, Free Market, Invisible Hand Leave a comment