Visible hand (economics)
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The "visible hand"[1] is an economic concept that describes the replacement of the regulatory function of the market mechanism by government intervention.[2] Simply put, it refers to government intervention.[3]
In economics the "visible hand" is generally considered to be the macro-fiscal policy of John Keynes that emerged in the 1930s as a remedy for the shortcomings of Adam Smith's "invisible hand" and advocated government intervention in the economy.[4] Actually, Smith already identified the disadvantages of the "invisible hand".[5] Since then, economists have been building on his insights to explain when and why markets get into trouble and how the visible hand of the government can enable the invisible hand to be more effective.[6]
In the 1930s Keynes and other economists became clearly aware of the problems of the market economy. He called these problems "market failure" and introduced the idea of adding a "visible hand" to Smith's "invisible hand" to strengthen the regulation of the market economy.[7] Mariana Mazzucato has argued that the "visible hand" fosters innovation.
Background
[edit]The Great Depression exposed the flaws of the market economy and forced economists to change course in search of new theories and ways out. So after the 1930s the theory of the "visible hand" emerged.[8] Keynesianism advocates replacing the "invisible hand" with the "visible hand" and replacing the "night-keeper" with the identity of the "intervener".[9]
Evaluations
[edit]Economist Mariana Mazzucato suggests that state involvement is not incidental but critical,[10] and that "it was the visible hand of the state which made these innovations (iPhone, CPU, Siri, and so on) happen."[11] She warned that had we waited for the "market" and business to do it alone...these major innovations wouldn't have come about.[12] She also states that one of the secrets of Silicon Valley's success has been its active and visible hand.[13]
In 2012 an article from The Economist claims that the "invisible hand" of the market is giving way to the "visible hand" of the state capitalism,[14] and that hand is often an authoritarian one.[15]
In 2015 an article from The Financial Times argues that markets are being dramatically reshaped and that the "visible hand" of economic policy is on the rise. The article also suggests that it is a clearly Keynesian world of muscular policy makers who have brought in deliberate distortions to improve growth and reduce volatility.[16]
Market liberalism believes that social distribution by the "visible hand" is morally improper, regardless of its effects, because it will infringe on people's freedom.[17]
See also
[edit]References
[edit]- ^ Manas Chatterji (March 2, 2017). Economic Globalization in Asia. Routledge. pp. 10–. ISBN 978-1-351-94189-1.
- ^ Yu Zongxian; Wang Jinli (November 30, 2003). A Visible Hand. Linking Publishing Co., Ltd. pp. 3–. ISBN 978-957-08-2645-6.
- ^ "Abbott's message to the world: governments should stand back". The Conversation. January 24, 2014.
- ^ "Theoretical Economics". Theoretical Economics: 33–. 2002. ISSN 1005-4286.
- ^ Jacob S. Hacker and Paul Pierson. "Making America Great Again : The Case for the Mixed Economy". Foreign Affairs. March 21, 2016.
- ^ Jacob S. Hacker; Paul Pierson (February 14, 2017). American Amnesia: How the War on Government Led Us to Forget What Made America Prosper. Simon and Schuster. pp. 4–. ISBN 978-1-4516-6783-7.
- ^ Jiang Chang (2004). Towards Elegant Survival: A Study of Social Value Choices in 21st Century China. China Social Sciences Press. pp. 186–. ISBN 978-7-5004-4467-1.
- ^ Ma Yunrui (2007). Study of Chinese Government Governance Models. Zhengzhou University Press. ISBN 978-7-81106-724-8.
- ^ Mao Fei (2008). A study of China's civil service pay system reform. China Social Sciences Press. pp. 81–. ISBN 978-7-5004-6646-8.
- ^ Robert Clark. "Biden's billions a throwback to Cold War innovation". Light Reading. June 10, 2021.
- ^ R. Sassower (March 4, 2015). Compromising the Ideals of Science. Palgrave Macmillan UK. pp. 47–. ISBN 978-1-137-51942-9.
- ^ Rosemary Papa; Shadow W. J. Armfield (April 19, 2018). The Wiley Handbook of Educational Policy. Wiley. pp. 44–. ISBN 978-1-119-21844-9.
- ^ Mariana Mazzucato. "Taxpayers Helped Apple, but Apple Won't Help Them". Harvard Business Review. March 8, 2013.
- ^ Adrian Wooldridge. "The visible hand". The Economist. January 21, 2012.
- ^ The Economist Publications (PUK Rights) (May 1, 2012). The Economist: State Capitalism: The Visible Hand. Penguin Books Limited. pp. 10–. ISBN 978-0-241-96389-0.
- ^ Subitha Subramaniam. "The rise of the visible hand in economic policy". Financial Times. May 2, 2015.
- ^ Zhou Baosong (July 15, 2015). The Ethics of Politics: From a Liberal Perspective. The Chinese University of Hong Kong Press. pp. 146–. ISBN 978-962-996-664-5.