The “invisible hand” was discredited long ago

Members of our group who have been writing Ron Paul posts note the amount of comments they have been getting from L/libertarian true believers, as well as a few noting that their laissez-faire economic beliefs have long been disproved.

I’ve blogged about this on my blog before, so I’m going to tie a few ideas together.

First, economics was philosophy, not “social science” (the idea didn’t even exist then, “natural science” as a separate discipline was just emerging) when Adam Smith wrote “Wealth of Nations” in 1776.

Whence the idea, philosophically, then, of Smith’s famous, or infamous, “invisible hand”?

Enlightenment Deism, with its believe in a Deity who wound up the mechanism of the “clock” running our universe, and then took his hands off of it, i.e., laissez-faire. (This idea was actually around a century earlier, part of what lies behind German philosopher Gottfried Wilhelm Leibnitz’s assertion that this is “the best of all possible worlds.”)

Well, a number of findings in the world of science have cratered the theory of the “wind-up universe.”

Tops is, obviously, quantum theory. Early 20th-century physicists started to recognize that quantum mechanics’ uncertainty principle could either be considered a human-measurement limitation or else a fundamental “graininess” of “fuzziness” to the space-time fabric of the universe itself. Most understood it the first way, perhaps making a deliberate choice. But Einstein, in his famous “the Old One does not play dice” comment, recognized the uncertainty principle for what it really is: there is a limit to precision.

Second, modern heterodox economics, especially when it pairs up with the latest research from neuroscience and cognitive science, recognizes just how strong emotional drives are for home economicus, meaning we’re a lot less rational in much of our economic decision-making than libertarians believe, or would have the rest of us believe.

But, there’s evidence beyond scientific theories and research.

If Voltaire’s riposte to Leibnitz wasn’t enough, the horrors of the Napoleonic wars, followed by the far greater ones of World War I and World War II, show just how irrationally emotional humans are, and that a Deity who would wind up a clock with that result is either pretty weak or pretty clueless.

And, at Hiroshima, the empirical evidence of this met the scientific theory of quantum mechanics with horrific results.