'Adam Smith, the father of modern economics, is often cited as arguing for the “invisible hand” and free markets: firms, in the pursuit of profits, are led, as if by an invisible hand, to do what is best for the world. But unlike his followers, Adam Smith was aware of some of the limitations of free markets, and research since then has further clarified why free markets, by themselves, often do not lead to what is best. As I put it in my new book, Making Globalization Work, the reason that the invisible hand often seems invisible is that it is often not there.'
Joseph Stiglitz, Making Globalisation Work
A selection of the inanities, insanities and inconsistencies that the invisible hand - there or not there - manages to conjure out of thin air. The believers tolerate the madness, certain that the hand knows best, and certain that it will lead us out of madness.
Blaming the invisible hand makes the following examples of a mad world rather than a mad bad one. In fact, there are more than enough people behind the hand that isn't there who understand full well what it is doing (or not doing). The insane ones are those of us who continue to believe that it is doing or not doing anything at all, let alone that it is noble and intelligent and full of good intentions.
See them all together here.
...if the whole world wished to consume at the level of the United States - a consumption pattern which has been fuelled, incidentally, by the credit binge which led to the current economic crisis - we would need, conservatively, over 5 planets like earth to support them. But, under the current pattern of unequally distributed benefits from growth, to lift everyone in the world onto a modest $3 per day, would require the resources of around 15 planets like ours. Where, you might ask, will the other 14 come from?
...we live in a society with 42 brands of washing powder available at most supermarkets, 93 different personal bank account options, 72 family saloon car models available, 17 celebrity magazines, 56 brands of mp3 player in the shops (not counting the internet) and 541 different types of telephone you can install for your landline.
Cheap airlines go to 423 destinations from Britain, but domestic rail transport is unaffordable by most people! In return for all this, people work longer and harder, have less secure pensions and a more difficult old age...
the statistics [in Russia] were sobering: with efficient capitalism replacing moribund and decadent communism, output was supposed to soar. In fact GDP declined 40 % and poverty increased tenfold. And the results were similar in the other economies making the transition who followed the advice of the US Treasury and the IMP.
, in The Roaring Nineties
All over Latin America, there is disillusionment with the policies that the United States and the IMF had pushed. Growth under liberalisation is just over half of what it was under the old pre-reform regime... Unemployment is up 3 percentage points; poverty... is up even as a percentage of the population. Where growth has occurred, the benefits have accrued to those at the upper part of the income distribution.
In 2006, the blessed great britain...
* imported 586 tonnes of sweet biscuits, waffles and wafers, gingerbread, and exported 669 tonnes.
* sent 1,445 tonnes of sugar confectionery to Sweden, and brought in 1,632 tonnes from the same country.
* imported 14,137 tonnes of chocolate covered waffles and wafers and exported 15,856 tonnes.
Since 1990, the energy and natural resources sector (mostly coal, oil, gas and electricity) has given $418m to federal politicians in the US. Transport companies have given $355m... The big polluters favour the Republicans, but most of them also fund Democrats. During the 2000 presidential campaign, oil and gas companies lavished money on George Bush, but they also gave Al Gore $142,000, while transport companies gave him $347,000. The whole US political system is in hock to people who put their profits ahead of the biosphere.
, in The Kings of England
Brazil increased its GDP fourfold between 1960 and 1980, but found that her debt was far greater at the end of this period than it was at the beginning...
Brazil is a net exporter, but the increase in her debt meant whereas in 1960, 30% of her export revenues went on debt repayments, by 1980 this had risen to 78%. And Brazil has been one of the success stories. Many developing nations have found that their entire export revenues have been insufficient to repay the interest on their debts. By 1990, Brazil had reached this position. The country exported $31.4 billion worth of goods and imported $22.5 billions, but her debt repayments were so massive that they took all her gain from exports, and still left her showing a huge loss. In 1970, the total debts carried by developing nations stood at $68 billion, equivalent to 13% of those countries’ total GDP. By 1989, this debt had reached $1,262 billion, equivalent to 31% of total GDP. By 1997, the total stood at $2,100 billion.
, in The Grip of Death
GDP can estimate or approximate the money value of the products and services sold in this country during the year, but gives no clue as to the amenity of life or the welfare of the nation. A view of mountains that has given pleasure to generations enters the calculation of GDP only when it is concreted over at such and such a price. The value of silence is recognised only at the point when it is abolished by a new airport runway ... Let us deafen ourselves with new airports, blind ourselves with street light, choke ourselves with traffic, lest the economy suffer!
The only thing that keeps the system working at all is that the United States, the richest country in the world, has become the 'deficit of last resort'. As other countries strive to eliminate their deficits, as Japan and China continue to run huge surpluses, America is willing and able to run the huge deficits that make the global arithmetic add up. This is the ultimate irony. The financial system allows the US to live year after year far beyond its means, even as the US Treasury, year after year, lectures others on why they should not.
, in The Roaring Nineties
The ability to print money gives us immense power. It means, among other things, that we can continue to make loans that will never be repaid ... By the beginning of 2003, the US national debt exceeded a staggering $6 trillion and was projected to reach $7 trillion before the end of the year - roughly $24,000 for each US citizen.
, about his meeting with Omar Torrijos (quoted in Confessions of an Economic Hitman)
The free trade agreements, in effect, make unlawful all statutes and regulations that restrict private capital in any way. Carried to full realization, this means the end of whatever imperfect democratic protections the populace has been able to muster after generations of struggle in the realm of public policy. Under the free trade agreements any and all public services can be ruled out of existence because they cause “lost market opportunities” for private capital. So too public hospitals can be charged with taking away markets from private hospitals; and public water supply systems, public schools, public libraries, public housing and public transportation are guilty of depriving their private counterparts of market opportunities...
Acting as the supreme global adjudicator, the WTO has ruled against laws deemed “barriers to free trade.” It has forced Japan to accept greater pesticide residues in imported food. It has kept Guatemala from outlawing deceptive advertising of baby food. It has eliminated the ban in various countries on asbestos, and on fuel-economy and emission standards for motor vehicles. And it has ruled against marine-life protection laws and the ban on endangered-species products. The European Union’s prohibition on the importation of hormone-ridden U.S. beef had overwhelming popular support throughout Europe, but a three-member WTO panel decided the ban was an illegal restraint on trade.
One Wrexham woman found herself on the wrong side of the law when she helped herself to four plastic garden chairs from a privatised council tip. The Waste Recycling Group - instead of lending her a hand for helping push towards their target of 65% of all rubbish being recycled - phoned the cops.
One house search later and the chairs have been returned to their rightful place: a landfill, and the would-be Womble is waiting to see if the CPS is going charge her under the Theft Act.
Subsidies for one crop alone, cotton, that went to 25,000 mostly very well off US farmers, exceeded in value the cotton that was produced, lowering the global price of cotton enormously. American farmers...gained at the expense of the 10 million African farmers who depended on cotton for their meagre livings. Several African countries lost between 1-2% of their entire income, an amount greater than what these countries received in foreign aid from the United States. Mali, for instance, received $37 million in aid but lost $43 million from depressed prices.
, in The Roaring Nineties
... for the poor to get slightly less poor, the rich have to get very much richer, implying patterns of consumption which, in a world facing climate change, cannot be sustained. It now takes around $166 worth of global growth - made up of all those energy-hungry giant flat screen TVs and sports utility vehicles - to generate a single dollar of poverty reduction for people in absolute poverty, compared with just $45 dollars in the 1980s.
the WTO ruled that the U.S. corporation RiceTec has the patent rights to all the many varieties of basmati rice, grown for centuries by India’s farmers. It also ruled that a Japanese corporation had exclusive rights in the world to grow and produce curry powder.
Dr Robert Hare, a psychologist and internationally renowned expert on psychopathy ... told us that many of the attitudes people adopt and the actions they execute when acting as corporate operatives can be characterised as psychopathic. You 'try to destroy your competitors, or you want to beat them one way of another,' said Hare, 'and you're not particularly concerned with what happens to the general public as long as they're buying your product.' Yet, despite the fact that executives must often manipulate and harm others in pursuit of their corporation's objectives, Hare insists they are not psychopaths. That is because they can function outside the corporation... Businesspeople should therefore take some comfort from their ability to compartmentalise the contradictory moral demands of their corporate and noncorporate lives, for it is precisely this 'schizophrenia'... that saves them from becoming psychopaths.
During the 1980s - what was called the lost decade of development - from every $100 worth of global economic growth, around $2.20 found its way to people living below the absolute poverty line. A decade later that had shrunk to just $0.60c, and the actual mean income of those living under $1 per day in Africa also fell.