The Myth of The “Invisible Hand”
These days, when you hear debates about government policy towards the enterprise, you’ll often hear the typical rhetoric between two sides who hold overly simplistic arguments and refuse to actually listen to each other (sound familiar?). One side argues that we need tighter governmental regulation, more corporate taxes, etc. The other argues that we should practice laissez-faire, that governmental regulation is anti-capitalist, anti-productive, and only impairs the free market system.
From the last 75 years, we can see that the capitalist system is an extremely powerful system for human organization. It’s a system that provides hope, it encourages innovation, creativity, and hard work. It has given rise to efficient companies which have up to 750,000 employees (unbelievable, given the comparative inefficiency of governments with payrolls that size), to many new technologies, and has improved the quality of life of a lot of people. However, this powerful system also has its negatives. While it, in part, runs off of human greed, this important fuel can sometimes get the best of it – such as in the financial collapse which catalyzed the Great Depression, the current credit crisis, as well as environmental concerns.
The reality is that capitalism is a system of human organization. That’s it. It’s brilliant, but it’s not magic. In a way, it’s a set of rules that help organize things (like the laws of physics or the rules of football). The problem is, systems don’t have a world view. They don’t have feelings. They don’t have goals. Our thoughts towards and treatment of capitalism need to acknowledge this.
We, on the other hand, do have a world view, feelings, and goals. And we shouldn’t just tuck them away because the capitalist system “knows better”. Capitalism is a tool, and we’re not using it to its full potential. To make an analogy with the software world, an operating system is a bunch of computer code with certain levers and hooks. You can turn it on and it’ll run, but it won’t necessarily do anything you want it to. It’s only after you install your own software and configure it does it spring to life and start improving yours. With capitalism, this configuration belongs to us – the people and our government. It’s a matter of creating incentives (which, of course, is not easy). Do we want eergy independence and 100% renewable energy, and fast? Capitalism is the perfect tool, but we need to configure it to work for us.
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