Reviews for The invisible hand

The average rating for The invisible hand based on 2 reviews is 3 stars.

Review # 1 was written on 2011-07-10 00:00:00 Todd Thompson Contrary to the assumptions made in the history of economic theory (from Adam Smith, Ricardo, Mathus and Marx) that the development of the industrial base inevitably leads to the total impoverishment of the working class, we seem to be witnessing quite the opposite. The working classes in the advanced capitalist societies have never had it so good. We now live in an affluent society. Despite the more horrible predictions of these founding fathers of economic theory not coming to pass we have not moved on from many of their other predictions based on this idea. It is as if we have been unable to quite believe we are as affluent as we actually are. Galbraith sees capitalism not as one economy, but two. There is the private economy, where goods are produced to be sold in the open market, and then there is the public economy, where governments raise taxes to support socially necessary functions - the military, police, schools, sanitation, roads, and so on. (Galbraith is very good on the waste and danger that is modern excessive military expenditure - as he ends his book, "And let us protect our affluence from those who, in the name of defending it, would leave the planet only with its ashes.") One of these economies is obscenely wealthy and the other is absurdly poor. Galbraith suggests that the most quoted part of this book in the forty years since it was first published is: The family that takes its mauve and cerise, air-conditioned, power-steered and power-braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, blighted buildings, billboards and posts for wires that should long since have been put underground. They pass into a countryside that has been rendered largely invisible by commercial art. (The goods which the latter advertise have an absolute priority in our value system. Such aesthetic considerations as a view of the countryside accordingly come second. On such matters we are consistent.) They picnic on exquisitely packaged food from a portable icebox by a polluted stream and go on to spend the night at a park which is a menace to public health and morals. Just before dozing off on an air mattress, beneath a nylon tent, amid the stench of decaying refuse, they may reflect vaguely on the curious unevenness of their blessings. Is this, indeed, the American genius? The joke - if joke it is - is that the private economy actually needs to create our wants. So we get such absurdities as 'Cherry Coke' being relaunched every few years as if what the world really needs now is yet another sugar-filled drink flavour. Meanwhile, there are, I believe, serious questions about the structural integrity of many bridges in the US. Developed countries around the world are concerned with the shortage of funds available for healthcare, educations, policing - and the list goes on and on. Two economies - opposite problems facing each. It is not that people find it difficult to identify the problem - but the solution seems completely beyond us. In this book Galbraith first coined the phrase 'conventional wisdom' as that layer of prejudice that we cling to long after it has been discredited by circumstances (imagine being the person who came up with such a useful term). His major concern is to remove our obsession with production as the only criterion upon which we judge the success of our society. He talks of a particular US statesman defending the government of the day from an attack from the opposition by saying that it had provided the 'second best year on record'. His point here is that no one needs to be told in what sense this was the second best year. Not even the most fundamentalist Christian would think this statesman meant that there had been second highest church attendance of all time, for example. And no one would think that it was the year with the second lowest number of murders. And even if the point is taken that he clearly means economically - then why are we talking GDP and not, say, number of people employed? Where does this obsession with production come from? The answer is not as easy as it seems - there was a time when a member of society being 'unproductive' might have meant a serious drag on society and a real risk to society's ongoing viability - but those days are now long gone in advanced capitalist countries. Now we even pay farmers not to produce. So, we have two economies. The wealthy economy of producers finding new and better ways to get us to buy their products - mostly today by also encouraging us in our extravagant borrowing (borrowing money we can't afford so as to purchase goods we do not need). The other economy, the public economy, is one in which firstly a very large percentage of our taxes is wasted on the military and the rest thinly spread to those areas which do not lend themselves well to private production. To fund this second economy better Galbraith suggests increasing sales taxes. Now, this is an interesting and courageous idea. My initial reaction was a knee-jerk and that was to oppose it. Sales taxes are highly regressive and therefore fall mostly on the poor. As such, it seems that those Galbraith is seeking to help the most will be those forced to fund this assistance. The further problem is that there is no guarantee that the funds raised by this tax will, in fact, be used in better housing, education, etc, that will go to the poor. As he points out elsewhere, the general affluence of society leads to a culture of blame towards those who find themselves still poor. Clearly there must be attributes these people have that make them poor. Furthermore, these people tend to have no power in our society - so the idea that we would raise sales taxes so as to improve the lives of these people seems highly unlikely. And experience has shown that this is the case. Conservative governments are repeatedly elected and they see it as their duty to cut progressive taxes (such as income taxes) and substitute these with regressive taxes, such as sales taxes. The poor are punished every which way. I found the section on the relationship between monetary and fiscal policies in controlling economic growth and therefore inflation a brilliant exposition of the contradictions inherent in our major (if not sole) means of adjusting these key economic levers. Inflation is a reflection of demand within an economy. If there is too much demand then prices go up. To tackle inflation one must first tackle demand. There are effectively two ways of doing this. One is to produce more stuff. If you do this then supply will eventually outstrip demand and prices will fall. Another way is to suck money out of the economy. If people don't have any money they are unlikely to be able to buy stuff - so that will cut demand. Both of these methods of controlling demand - and thereby inflation - are vexed. The problem with increasing production is that this first requires investment into the economy to build the new factories and so on needed to increase supply. But this immediately produces the opposite effect to what you wanted. Before the factory can start to meet the old demand you were trying to reduce you have created a whole group of workers who are being paid to build the factory, manage the factory and so on. These people are being paid and thus adding money to the already over-heated economy, thereby increasing demand. The exact opposite of what you wanted to achieve. The other ways to address too much demand in the economy are rather 'blunt instruments'. You can either increase taxes - fiscal policy - or you can raise interest rates - monetary policy. That is, suck money out of the pockets of those who were trying to spend it. However, these levers are hardly delicate in their effects on the economy. The problem is that demand in the economy is not one single thing. Inflation may be affecting one part of the economy - housing, for example - but other parts of the economy might actually be in need of increased demand. Raising interest rates clobbers all sections of the economy equally. It is remarkable that people never seem to ask: "So, explain this to me again, how is giving massive profits to banks the most obvious way to decrease demand?" It is clear Galbraith thinks the major problem is in creating artificial demand in the economy for goods and services we don't actually need. But I'm not sure how this problem can be addressed under capitalism. One of my favourite quotes from the text - which I shall leave you with - concerns the problem that our obsession with ever increased production is often at the expense of people - kicking people off farms or sacrificing jobs to third world countries where labour is so much cheaper. We do this all in the name of efficiency - and everyone knows efficiency is an unquestioned good - don't we? In the United States, as in other western countries, we have for long had a respected secular priesthood whose function it has been to rise above questions of religious ethics, kindness and compassion and show how these might have to be sacrificed on the alter of the larger good. The larger good, invariably, was more efficient production. The sacrifice obviously loses some of its point if it is on behalf of the more efficient production of goods for the satisfaction of wants of which people are not yet aware. It is even more tenuous, in its philosophical foundations, if it is to permit the more efficient contriving of wants to which people are not aware. And this latter is no insignificant industry in our time. A fascinating attack on the neo-liberal nonsense that dominates our economic debate.

Review # 2 was written on 2014-07-18 00:00:00 Heather Larson Oh, for fuck's sakes, what the fuck is wrong with you people? Is this a never-ending revival of the Dunciad? This ain't rocket science, for Christ's sakes'we've cottoned a shitload of the green-googly-moogly in the decades since the Great Slump, so why can't we apply the lessons we've learned from this gigantic laissez-faire clusterfuck? Goddamn greedy, overly ripe, crumb-lipped mall-mutts, I'd love to crack your fucking spongiform shells together to let in some oxygen! A progressive system of taxation, social safety nets and impartially administered regulatory agencies, with targeted government expenditure upon boring shit like education, transportation and communication networks, skills development, and leisure opportunities are all steps in the right fucking direction: to find that sweet spot, always tweaking and adjusting as necessary, to spread that whoresonned wealth around, keep the disparity to a minimum, whilst always realizing that we are moving into a new form of industrialized capitalism where consumption is king; in other words, shitheads, our economy is in a perpetual state of evolution, and we must evolve our policies along with them, with an ultimate goal of having the vast, unimaginable wealth our productivity, resources, infrastructure, global position and considerable fortune have bestowed upon our short-term-memory-riddled heads spread as equitably as possible, fueling small business growth, avoiding creativity-killing and stagnant monopolies, and enlarging the middle-fucking-class, those roseate, nauseous butterballs whose very size indicates the fucking health of a nation's economic state. Fucking assholes, wake the fuck up and figure out what the fuck is going on. Jesus H. Fucking Christ, I keep pointing this shit out and you tosspot pickle-ticklers, you thick-witted, cross-eyed Mary's, you tube-glued, gelatinous fuck-weevils keep screwing the goddamn pooch. I'm getting by-Christly fucking tired of spinning this particular mother-loving record, numbnuts. Wake up!