I found this work a bit long and drawn out, but perhaps this is just me as it is definitely a thought piece and sometimes it is difficult for me to follow some of the philosophical pieces we read. I do follow though, that the invisible hand is a social phenomenon not a natural one. This “hidden hand” is responsible for the creation of the banking system, loveable but useless Ferbies, and the contracted agents who help keep all the riff-raft out of poo alley.
However, I don’t understand how according to the author, that actions that are negative by products don’t fit in to the invisible hand explanation.
“we would certainly want to legislate that not every unintended consequence of human action qualify as an invisible-hand explanandum. Just think of the numerous occasions on which our children come to us in tears begging to be excused for the latest calamity they have wrought on the ground that they "didn't mean to". Quite obviously, the accidental by-products of many of our actions, even of several individuals' actions taken together, hardly constitute a promising recruiting ground for invisible-hand explanations.”
I don’t get this logic. So, all of the crazy awesome impacts that we receive from the market are from the invisible hand guiding actors to engage in the market place (this is not considered human action…I think he meant that…unsure though) are all thanks to the invisible hand, but any unintended actions like a boy breaking open milk jugs; does not fit into the invisible hand explanation. I understand what the author meant when he explained that it is too easy to say that the flat tyers (is this how British people say it?) are due to the profit seeking gas station when they in fact, they are not, and this misjudgment opens the door for conspiracy theory aimed at the invisible hand.
I would like to make this clear though, regardless of what the author states the flat tyers do fit in to the invisible hand explanation. I believe that they too are the outcome of the invisible hand. If it were not for the company who hired the boy to deliver the milk and the glass company who produced the bottles there would be not shards of glass on the road (if not for the invisible hand there would probably be no tyers/tires to be flattened either, but play along here I making a point). I think it is reckless and flat (no pun intended) to think that just because something is accidental (and oh yeah bad!) it is not a part of the invisible hand theory. It is important to realize that markets have externalities that arise when costs not are distributed properly. Even though these flat tyers are not the direct impact of some person trying to profit off of fixing them this is not say that they were not the outcome of some person or group trying to profit out of something. If one argues that indirect benefits are the result of the free market hidden hand friend it is illogical that they should exclude indirect costs from their definition.
I think you misinterpreted her argument. It's not that an Invisible Hand Explanation necessarily has to concern something that we deem "good" or "bad". It's that the term loses its usefulness unless we restrict it to social phenomena of a certain scope, or degree of complexity. Re-read page 267 starting with:
ReplyDelete"Attention should rather be directed to the fact that it is only when the social pattern or institution to be explained has a structure beyond a certain degree of
complexity that the invisible-hand explanation of it has a point."
To qualify as an IHE it is a necessary but not sufficient condition that an event is the unintended consequence of human action, but not human design (e.g. "I broke a bottle but didn't mean to").
"The explanatory interest of an invisible-hand explanation increases with the extent to which there is a difference in type between the overall pattern to be explained and the individual actions which are supposed to bring it about, as well as with the complexity of the intermediary process."
The phenomena must be "more than the sum of its parts" so to speak.