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The lesser-regarded invisible hands of capitalism

Full Speed to Port!

Posted: July 23, 2008 12:21 a.m.
Updated: September 23, 2008 5:03 a.m.
 
Economists of all stripes have long taught the lessons of Adam Smith’s “The Wealth of Nations.” Smith’s “Invisible Hand” of free markets has particular fame, and one hears reference to it frequently — sometimes correctly, but often twisted beyond its intent.

The overarching “Invisible Hand” precept is that, in open and free markets, people operating in their own selfish interests automatically, as though guided by some invisible hand, serve the best interests of society as a whole. Market production of goods and services flows to where peoples’ demand takes it.

Plainly, much of American prosperity has stemmed from conditions in which ordinary folks are empowered to work as they will, buy what they want and do as they may.

But the viable maxim of the “Invisible Hand” is distorted by zealot capitalists who add their own addendum, commonly referring to Smith’s observation as “The Invisible Hand of Capitalism.”

Adam Smith didn’t write of “capitalism.” Still, capitalist preachers co-opt his “Invisible Hand” as their own, altering it into a doctrine that supersedes free markets with laissez-faire (unregulated) capitalism.

Zealots preach this embellished Invisible Hand religion with absolute, committed faith. But Smith’s virtue of free choice is lost in their fervor for the booty of unbridled capitalism, and today it seems those highest up in the capitalistic theocracy are those closest to apostasy against Smith’s admonishment of well-maintained, open free markets.

In our current administration’s laissez-faire deconstruction of market oversight, rampant, unrestrained greed threatens America’s common economic well-being and freedom. Unregulated capitalism doesn’t necessarily go hand in hand with ensuring consumers abundant free choice. Often, the grander the capitalist entity, the greater the sin against Smith’s free-market precepts.

The structure for plunder is constructed as pontiffs preach market congregants an economic dogma that it is capitalism itself, not good governance that makes our markets free.

Unrestrained capitalism is broadly represented and sold as unimpeded freedom for all. We’re warned with Old Testament fury that great doom awaits the American economic miracle should we offend the almighty Invisible Hand with prudent, fair regulation.

Capitalism, to work best, they say, must work alone, unguarded and unbridled.

Yet if put this premise to the inquisition, we discover our modern oil-military-hedge fund-industrial complex of 2008 is far removed from Adam Smith’s quaint markets controlled by invisible hands of free choice.

Gilded with massive wealth, today’s capitalism predictably and frequently acts to dominate those who would compete or constrain. Power securely grasped, massive capitalist hands morph into massive invisible fists.
“Heretic!” chant the pew-fillers of Santa Clarita’s True Way Capitalistic Tabernacle. But gaze about and you will see the truth — and the truth will set you free.

Your twisted tabernacle is a Temple of Doom. On matters most important, our hands are tied and bound with invisible bonds of servitude — even as our hope and faith in orthodox capitalism blinds us from a clear view of our own enslavement.

Test your faith. Consider the gas stations located on our various corners. Observe the free-market miracle that gas prices all around are mere pennies apart.

Marvel how competitors earnestly compete on price and service! Behold the abundance of your fuel choices. Biodiesel, ethanol, electricity and natural gas abound in such diversity that the invisible hand struggles to decide.

Oh, faith in things unseen! In truth, we’re compelled by big oil’s invisible collusion with oilmen politicians to constrain choice and free will.

While filling with five-dollar-a-gallon fuel, recall the $10 billion tax break laissez-faire capitalists gifted on the same Big Oil now stealing your big money.

Recall the investment tax credits soon expiring for competing alternative energy sources that would expand your energy choice. Big Oil’s big invisible hand has a big invisible grip on our collective throats.

Consider our many foreclosure-distressed neighborhoods. Short years ago, unrestrained moneymen thought it a grand idea to make millions of home mortgages to uncreditworthy buyers and package them up as credible investments to unwary investors — often to the institutions holding our hard-earned savings.

Our laissez-faire administration looked away. And unbridled capitalism indeed earned unbridled profits.
But as the wages of sin is death, today entire neighborhoods lie in ruin, our consumer banks teeter and fall — and guess who is burdened with the bailout? It’s you and me, the faithful and fooled congregants suffering at the rear of the capitalist tabernacle.

Under-regulated, unbridled capitalism picked our pockets clean, but subsequently stumbled under the weight of its own greed. Now we’re robbed twice as our laissez-faire administration reactively requires taxpayers to bail out the barons who partook of the plunder.

Perhaps we’ll finally learn strong lessons from our years of plenty turning to years of famine. Perhaps we’ll again learn that vigilance and oversight of market freedoms is every bit as important as vigilance for other justice.

Just as rule of law maintains the civil order for all to enjoy, similarly fair and disciplined market oversight prohibits abuse that threatens our individual hand of economic well-being.

Capitalist Highest Priest Reagan was wrong when he uttered, “Government is the problem.” No — rather, incompetent, lazy, lax and corrupt government is the problem. Good governance advancing fair principles of economic oversight is the solution we need.

God grant us sweet and swift forgiveness from our trespasses against the true Invisible Hand of smartly regulated and orderly free markets.

Gary Horton lives in Valencia. His column reflects his own views, not necessarily those of The Signal. “Full Speed to Port!” appears Wednesdays in The Signal.

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