FIV

Central Listing in AZ Article: FoFIH

Rafi Amir-ud-Din and Asad Zaman “Failures of the ‘Invisible Hand’”

Forum for Social Economics Vol. 45, Iss. 1, 2016 pp 41-60.

DOI:10.1080/07360932.2015.1019536

Pre-Publication Draft Available at SSRN: http://ssrn.com/abstract=2293940

1 hour Video Lecture on this topic on YouTube

Textbooks, like Mankiw, state that the four claims listed below are at the center of modern economics. Our goal in this paper is to show that all four of these claims are wrong.

1. Participants in market economies are motivated by self-interest. (SI) – In fact, cooperation, service, recognition and status in community, and reciprocity are very strong motivators of human behavior.

2. Decentralized market economies work very well, and maximize the welfare of society as a whole. (FM: free markets). As illustrated by the Global Financial Crisis, unregulated markets lead with regularity to disasters and crises.

3. The reason for excellent functioning of decentralized market economies is that all participants are motivated by self-interest. This self-interest works better than love and kindness in terms of promoting social welfare. (GG: greed is good). This is absolutely false, and the opposite of the truth – love and kindness work much better at promoting social welfare.

4. The principles listed above were summarized in the concept of the “Invisible Hand” by Adam Smith. (AS). Adam Smith can be blamed for many wrong ideas, but this is not one of them. In fact, free market economists attribute this theory to Adam Smith to create legitimacy for their ideas.

Capitalism in Crisis: Main Page — How did Greed is Good, the motto of capitalism, come to replace earlier Christian ideals in the West?

Pre-Publication Version of Paper from SSRN — Failures of the IV

Previous Versions, References, Submission History — Materials, Information, and references related to this paper

Pursuit of Wealth — How did this become acceptable? Collection of links and references

YouTube Video-Talk 1hr — Seminar Talk on Failures of the Invisible Hand