Basu Beyond the Invisible Hand

Groundwork for a New Economics
Course Book
ISBN: 978-1-4008-3627-7
Verlag: De Gruyter
Format: EPUB
Kopierschutz: Adobe DRM (»Systemvoraussetzungen)

E-Book, Englisch, 312 Seiten

Why economics needs to focus on fairness and not just efficiency

One of the central tenets of mainstream economics is Adam Smith's proposition that, given certain conditions, self-interested behavior by individuals leads them to the social good, almost as if orchestrated by an invisible hand. This deep insight has, over the past two centuries, been taken out of context, contorted, and used as the cornerstone of free-market orthodoxy. In Beyond the Invisible Hand, Kaushik Basu argues that mainstream economics and its conservative popularizers have misrepresented Smith's insight and hampered our understanding of how economies function, why some economies fail and some succeed, and what the nature and role of state intervention might be. Comparing this view of the invisible hand with the vision described by Kafka—in which individuals pursuing their atomistic interests, devoid of moral compunction, end up creating a world that is mean and miserable—Basu argues for collective action and the need to shift our focus from the efficient society to one that is also fair.

Using analytic tools from mainstream economics, the book challenges some of the precepts and propositions of mainstream economics. It maintains that, by ignoring the role of culture and custom, traditional economics promotes the view that the current system is the only viable one, thereby serving the interests of those who do well by this system. Beyond the Invisible Hand challenges readers to fundamentally rethink the assumptions underlying modern economic thought and proves that a more equitable society is both possible and sustainable, and hence worth striving for.

By scrutinizing Adam Smith's theory, this impassioned critique of contemporary mainstream economics debunks traditional beliefs regarding best economic practices, self-interest, and the social good.

Autoren/Hrsg.

Basu, Kaushik

Fachgebiete

• Wirtschaftswissenschaften Volkswirtschaftslehre Volkswirtschaftslehre Allgemein Wirtschaftstheorie, Wirtschaftsphilosophie
• Wirtschaftswissenschaften Wirtschaftswissenschaften Wirtschaftsgeschichte

Inhaltsverzeichnis

Preface ix

Chapter 1: In Praise of Dissent 1

Discontent and Discourse 1 Smith's Myth 9 The Lay of the Land 11

On Understanding 13

Chapter 2: The Theory of the Invisible Hand 16

Competition and Social Welfare 16

The Standard Critiques 20

Chapter 3: The Limits of Orthodoxy 24 The Dual Interpretation 24

Evolving Feasible Set 27

Evolving Preference 31

Social Norms and Culture 33

A Comment on Incentive Compatibility 41

On Methodological Individualism 43

On Knowledge 49

Chapter 4: The Economy according to Law 55 Kafka's Invisible Hand 55

Law's Economy: The Standard View 57

The Law as Focal Point 60

Implications of the Focal View of Law 66

A Game-Theoretic Illustration of Law as Focal Point 71

A Research Agenda 73

Chapter 5: Markets and Discrimination 77

Do Free Markets Reduce Discrimination? 77

The Literature 79

The Self-Reinforcement of Productivity 83

The Entrepreneur 85

Toward a New Theoretical Model 89

Appendix: Aptitude Test Administered to Slum Children at Anandan in Calcutta 95

Chapter 6: The Chemistry of Groups 97

Identity and Methodological Individualism 97

The Ingredients of Theory 101

Altruism, Trust, and Development 104

The Janus Face of In-group Altruism 110

The Malignancy of Identity 120

Chapter 7: Contract, Coercion, and Intervention 130

Principle of Free Contract 130

Coercion and Voluntariness 138

The Large Numbers Argument 141

Acts and Rules 148

Multiple Equilibria 153

Domains of Intervention 155

Chapter 8: Poverty, Inequality, and Globalization 157

Governance and the Globe 157

Inequality 158

Some Facts of Globalization 161

Some Analytics of Globalization 165

Inequality and Poverty: The Quintile Axiom 167

Poverty-Minimizing Inequality, with or without Globalization 171

Policy Implications 176

Chapter 9: Globalization and the Retreat of Democracy 180

Democracy in Deficit 180

Globalization and Influence 185

Dollarization and Democracy 187

Democratic Global Institutions 189

Chapter 10: What Is to Be Done? 193

Interpreting the World and Changing It 193

The'Environmental Case' against Inequality 199

Despair and Hope 208

Notes 213

References 235

Index 259

Über Autor(innen)

Kaushik Basu is professor of economics and the C. Marks Professor of International Studies at Cornell University. He is currently chief economic advisor to the Ministry of Finance of the Government of India. His books include Prelude to Political Economy: A Study of the Political and Social Foundations of Economics and Of People, of Places: Sketches from an Economist's Notebook.