Adam Smith famously wrote of the “invisible hand,” by which individuals’ pursuit of self-interest in free, competitive markets advances the interest of society as a whole. And Smith was right: Free markets have generated unprecedented prosperity for individuals and societies alike. But, because we can be manipulated or deceived or even just passively tempted, free markets also persuade us to buy things that are good neither for us nor for society.
This observation represents an important codicil to Smith’s vision. And it is one that George Akerlof and I explore in our new book, Phishing for Phools: The Economics of Manipulation and Deception…Sounds interesting and timely.
Project Syndicate
Fraud, Fools, and Financial Markets
Robert J. Shiller, a 2013 Nobel laureate in economics, is Professor of Economics at Yale University and the co-creator of the Case-Shiller Index of US house prices
Fraud, Fools, and Financial Markets
Robert J. Shiller, a 2013 Nobel laureate in economics, is Professor of Economics at Yale University and the co-creator of the Case-Shiller Index of US house prices
1 comment:
I know nothing of Adam Smith: but self-interest, creating 'free' competitive markets, societal advance; all by serendipity – sounds like an economist's wet-dream to me! (Subtle joke alert): Invisible hand – ha!
Individuals can pursue self-interest. But it leads to chaos.
For me, there has to be a reversal of polarity, so that self-interest changes from a centripetal FORCE that disappears down its own gurgler to a centrifugal ENERGY that intelligently, embraces and nurtures the whole. Its not just a matter of iron out the wrinkles of Adam Smith's version of self-interest; like being tricked into buying stuff that is harmful.
Here is a scientific fact, proven in human history, written in chaos, incredible suffering, pain, and blood: only the human heart is inclusive. Mind just sees differences and fights to preserve the sense of 'I'. This is the undressed version of Adam Smith's self-interest. Coercion (dominion and submission) rushes in to fill the vacuum of cooperation. And in the world ….
Men build endless penis extensions like the Shanghai Tower. That is their wisdom. Still creating idols in stone and worshipping them: the glass is so they can admire themselves! That is how hypnotic self-interest is. Not much imagination there. Women take a single seed, create and nurture the 'child' – that's why they are the intelligent ones.
Post a Comment