-Caveat Lector-
-------- Original Message --------
Subject: The Invisible Hand: Still Scary After All These Years
Date: Wed, 1 Nov 2000 23:02:39 -0600 (CST)
From: kome <[EMAIL PROTECTED]>
Organization: ?
To: undisclosed-recipients:;
I've started writing a new weekly column for a major ISP/news
portal in Canada.
See: http://www1.sympatico.ca/news/columns/index.html
Here's my Halloween column, which is generating some discussion.
:)
The Invisible Hand
Since it's Halloween, I want to talk about a hoary old spirit that
haunts the [Canadian] federal election campaign: the Invisible Hand
of laissez-faire capitalism.
Adam Smith first put forward the hypothesis that the "Invisible
Hand" of the marketplace inevitably leads to social benefit when
people pursue their own commercial interests. He did this in a 1776
book called The Wealth of Nations.
http://www.bibliomania.com/2/1/65/112/frameset.html
Modern proponents extend the Invisible Hand theory to say that
absolutely any government intervention in the marketplace -+ such
as taxes, consumer, environmental or labour regulations +- distorts
this mystical power and prevents it from accomplishing social good.
And if you believe that, I've got some werewolf repellent to sell
you.
Century-plus lifespan
Although often cited as a passionate defense of capital, the
introduction to The Wealth of Nations actually starts by acknowledging
that work is the source of all wealth:
"The annual labour of every nation is the fund which originally
supplies it with all the necessaries and conveniences of
life...".(Emphasis added.)
In Smith's time, most people lived directly from the land or from
their own cottage industries. The work involved was their own. When
industrialization changed all that, socially and geographically,
laissez-faire economics evolved into a form of Social Darwinsim.
The Great Crash
Unfettered capitalism finally self-destructed in the Great Crash
of Oct 24, 1929, from a surfeit of speculation on credit. The
Invisible Hand was deader than the whale oil lamp.
Desperate governments turned to public works programs that dramatically
and definitively proved John Maynard Keynes' theories -- that
govenment spending, even deficit spending -- stimulated the economy
as effectively as private spending did.
"In 1945 or 1950, if you had seriously proposed any of the ideas
and policies in today's standard neo-liberal toolkit, you would
have been laughed off the stage or sent off to the insane asylum,"
says political scientist Susan George, in her widely-quoted essay,
A Short History of Neoliberalism.
New name, bigger game
Neoliberalism is one name for the kind of de-regulation and
privatization that Margaret Thatcher and Ronald Reagan introduced
in the 1980s. "TINA," Thatcher often said, an acronym for There
Is No Alternative, to slashing government spending and services.
Currently, laissez-faire theory has evolved again into "globalization".
Its friends represent it as an immutable, irresistible natural
force.
Indeed, says Robert McChesney, author of Rich Media, Poor Democracy:
"In the end, proponents of neoliberalism cannot and do not offer
an empirical defense for the world they are making. To the contrary,
they offer -- no, demand -- a religious faith in the infallibility
of the unregulated market, drawing upon nineteenth century theories
that have little connection to the actual world."
Charming the voters
One article of this faith is that taxes are inherently bad and that
giving money to the private sector is inherently good +- no matter
what either sector actually does with the money.
Politicians repeat the magical phrase, "Tax breaks", hoping to
charm votes from the public.
That's why the Liberal party platform includes this plank:
"We encouraged entrepreneurship, jobs and growth...by committing
to cut the corporate income tax from 28 per cent to 21 per cent...[and]
by cutting the "inclusion rate" for capital gains taxes to one half
from two-thirds -- meaning far less of Canadian investors' capital
gains will be taxed.... "
And Stockwell Day said in a September speech: "Ottawa's tax and
debt burdens have held Canadians back....Despite economic growth,
the real disposable income of Canadians -- the amount of money
Canadians have had to pay their mortgages, buy their food and go
on vacation once taxes and inflation are taken into account -- has
fallen by two percent...."
Invocation
It's almost as if the very phrase "tax break" invokes the power of
the Invisible Hand and casts a haze over people's minds.
Stockwell Day doesn't have to deal with the cold, clammy fact that
real wages have decreased over the last decade. The Liberals don't
have to address whether corporations actually do create jobs in
Canada, much less the whole fearsome question of what Time Magazine
calls corporate welfare.
Spin
I think the Invisible Hand's powers to do social good are greatly
exaggerated, to say the least.
Sometimes commercial pursuits lead people to do really rotten
things, like insider trading or polluting a neighbour's well, and
even the Invisible Hand can't put a socially beneficial spin on
that.
As for developing strategies for employment or social policies, it
seems to me that relying on the Invisible Hand to do what's best
makes no more sense than relying on, say, the Great Pumpkin.
~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@
Penney Kome, [EMAIL PROTECTED]
author & journalist. http://www.members.home.net/kome
NEW! Columnist:
http://www1.sympatico.ca/news/columns/index.html
Editor, Women'space http://www.womenspace.ca
~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@~~@
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