It's actually really difficult to continue to blog, I need to turn it into a habit, maybe. Today i'm going to write on a subject I found interesting from my macroeconomics course that I also read about an alternative view in the Economist magazine here. The invisible hand.
Firstly i'll quickly explain what the invisible hand is: The invisible hand is the sort of self-regulating nature of markets that helps when determining how resources are allocated - if a resource is scarce then it'll become expensive meaning demand will fall and the commodity will be sold to those who value it the most. The invisible hand is based on individuals acting in their own self-interest. Essentially, as Adam Smith laid out, if everyone looks after themselves, and the government doesn't intervene, then this will be best for society as a whole. I personally disagree with this as have many, the need for intervention rose dramatically and fell over the past century, with catastrophic world events such as WWI, WWII and the Great Depression all calling for change.
Being an LSE student it would be rude not to side with Beatrice Webb and her ideal of the welfare state. Despite capitalism obviously raising world living standards and spurring technological growth, a total free market would be almost barbaric. Government intervention is definitely necessary to raise human capital - sending kids from the workhouse into school, raising the minimum wage to increase productivity and consumption, et cetera. I'm not a communist sympathiser although Marx' manifesto does seem increasingly utopian the more I think about it, but can the western world begin to become dubious with the increasing boom in China? I mean, they've had a 10% level of growth for so many years now... and from what I have read this growth is sustainable even after they have their final sectoral shift into industry.
Can the visible hand of state capitalism work as a long term option?
"Geography has made us neighbours. History has made us friends. Economics has made us partners, and necessity has made us allies." - JFK
[unfinished - any comments welcome]
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