11 Matching Annotations
  1. Jan 2021
    1. Preparatory remarks on the concept of an invisible hand: 1. The concept of an invisible hand plays a vital role in Karl’s analysis, even though Smith refers to it explicitly only twice in his two major books, once in The Wealth of Nations, and once in The Theory of Moral Sentiments(2005 [1759]). 2. While there is no generally agreed-upon definition of what is meant by an invisible hand, we shall employ the approach of Ullmann-Margalit (1978), which even Samuels (2011, 291) appears to regard as above reproach.

    2. If the hand behind the invisible hand is also invisible, we have invisible hands operating, as it were, at different levels. The signalling device at the individual dimension (let’s call this Level 1) will be the price system. If the hand behind the invisible hand is also invisible, then the HUMS explanation amounts to the claim that the system is spontaneously generating the kind of institutions (Level 2) necessary for the invisible hand to operate at Level 1. We would then have spontaneous or unintended order at Level 1 and Level 2.

      Interesting introduction of the different levels at which the Invisible hand operates - Level 1 - individual dimension (Burning man) and Level 2 - institutional arrangements (Rules, Order, Planning, Organization). If the order (Level 2) that emerges at Level 1 is spontaneous and unintended then the hand behind the invisible hand is also invisible. Here, it is also introduced the 'price system' as a term. For now, I cannot understand how exactly are the price system and Level 1 interrelated.

    3. We have thus an example in which the hand behind the invisible hand is visible, in line, therefore, with Mittermaier’s presentation of the pragmatic view in which humans deliberately decide upon an institutional framework within which an invisible hand is supposed to operate. If, however, we were to argue that the appropriate institutional arrangements would have emerged of their own accord, in other words without such planning, Mittermaier would classify us among the ranks of the dogmatic free marketeers. For a dogmatic free marketeer, the hand behind the invisible hand is also invisible.

      The difference behind a pragmatic and dogmatic free market - in a pragmatic market - the hand behind the invisible hand is visible, whereas in a dogmatic market - the hand behind the invisible hand is also invisible.

    4. An invisible hand process is at work if individual human action results in some sort of order that was not specifically designed by those individuals pursuing their own ends. But in order for the invisible hand to operate well, institutions need to be in place for otherwise the human action at play could result in chaos (no order at all).
    5. and institutional structures (street layout, fire prevention measures, moral codes etc) ensure that some sort of order prevails. The hand behind the invisible hand is visible.
    6. The economist Paul Romer, who attended the 2019 event, was quoted in the New York Times as saying:I picture an economist showing up at Burning Man and saying: ‘Oh, look! This is the miracle of the invisible hand. All of this stuff happens by self-interest, and it just magically appears.’ And there’s this huge amount of planning that actually is what’s required beneath it to make the order emerge.

      Practical/contemporary explanation of the idea behind the 'invisible'hand'

    7. We have a means of identifying what an invisible hand is all about without necessarily using the terms invisible or visible. And should we find it more convenient to do so, we can associate an invisible hand argument with either a spontaneous (Hayek) or an unintended (Otteson) order.
    8. Hayek is thus informing us that the framework of our analysis should include institutions that are ‘The results of Human Action but not of Human Design’.
    9. Hayek notes that if we confine our arguments to the natural and artificial realms confusion is bound to ensure: ‘... one would describe a social institution as “natural” because it had never been deliberately designed, while another would describe the same institution as “artificial” because it resulted from human action’ (Hayek 1967, 130)
    10. Preparatory remarks on the concept of an invisible hand: Suppose we identify an order in human affairs. On further investigation we ascertain that although the regularity came about as a result of human action, it did not arise from human deliberation. In other words, the order did not arise from human design. Under such conditions, says Ullmann-Margalit (1978, 263), we have an invisible hand explanation. She refers to this realm of things that results from human action but not from human design as a middle realm (1978, footnote 2) and cites Hayek (1966 and 1960) as her source. An example that comes most readily to the fore as an invisible hand explanation is the one associated with the creation of money (Ullmann-Margalit 1978, 264) or the emergence of language.

    11. Suppose we identify an order in human affairs. On further investigation we ascertain that although the regularity came about as a result of human action, it did not arise from human deliberation.

      Part of ''Preparatory remarks on the concept of an invisible hand". It continues - In other words, the order did not arise from human design.