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
Taiwan is a small, humble place. There is no Eiffel Tower, no pyramids — no singular attraction that draws the world’s attention. If it makes headlines, it is because China wants to invade. Yet, those who find their way here by some twist of fate often fall in love. If you ask them why, some cite numbers showing it is one of the freest and safest countries in the world. Others talk about something harder to name: The quiet order of queues, the shared umbrellas for anyone caught in the rain, the way people stand so elderly riders can sit, the
Taiwan’s fall would be “a disaster for American interests,” US President Donald Trump’s nominee for undersecretary of defense for policy Elbridge Colby said at his Senate confirmation hearing on Tuesday last week, as he warned of the “dramatic deterioration of military balance” in the western Pacific. The Republic of China (Taiwan) is indeed facing a unique and acute threat from the Chinese Communist Party’s rising military adventurism, which is why Taiwan has been bolstering its defenses. As US Senator Tom Cotton rightly pointed out in the same hearing, “[although] Taiwan’s defense spending is still inadequate ... [it] has been trending upwards
After the coup in Burma in 2021, the country’s decades-long armed conflict escalated into a full-scale war. On one side was the Burmese army; large, well-equipped, and funded by China, supported with weapons, including airplanes and helicopters from China and Russia. On the other side were the pro-democracy forces, composed of countless small ethnic resistance armies. The military junta cut off electricity, phone and cell service, and the Internet in most of the country, leaving resistance forces isolated from the outside world and making it difficult for the various armies to coordinate with one another. Despite being severely outnumbered and
Small and medium enterprises make up the backbone of Taiwan’s economy, yet large corporations such as Taiwan Semiconductor Manufacturing Co (TSMC) play a crucial role in shaping its industrial structure, economic development and global standing. The company reported a record net profit of NT$374.68 billion (US$11.41 billion) for the fourth quarter last year, a 57 percent year-on-year increase, with revenue reaching NT$868.46 billion, a 39 percent increase. Taiwan’s GDP last year was about NT$24.62 trillion, according to the Directorate-General of Budget, Accounting and Statistics, meaning TSMC’s quarterly revenue alone accounted for about 3.5 percent of Taiwan’s GDP last year, with the company’s
RSS