Invisible hand of the markets?


We all know the phrase. Adam Smith coined it when he said that leave it to the markets. Distribution, price, supply, quality will be all worked out magically by this impersonal force, better than any intelligent body can (didn’t he? in any case isn’t it true? haven’t we seen the collapse of centrally planned economies?)
Well, He didn’t, it is not and we haven’t.
Smith’s phrase has never meant to say all that. As Chomsky pointed out, Smith believed in factors outside the markets, such as human compassion. The only time he’s used this phrase was in relation to British industrialists who’s compassion, he has claimed, would not allow a complete disintegration of working conditions and pay of british workers by exporting jobs to lower paid colonies. That is all Smith said in relation to the invisible hand (and this dynamic turns out to be patently wrong: the era of imagined compassion, if ever existed, is well and truly over. The naked truth is plainly seen: capitalist and leaders who “care” are out of business in matter of what seems seconds).
Centrally planned economies are not a failure. In fact, today’s most succesful economies have started out as the most protected ones. These succesful economies, even when dominating the world, are still protected where they are not the strongest and are centrally planned: for instance, the american taxpayer is heavily subsidising hi-tech companies (mostly through military and tertiary education expenditure) through central planning and distribution and and despite all the talk of FTAs, the american economy is well protected with quotas, tariffs and internal subsidies in areas where they are not as strong as the trading partners. But the legend of the invisible hand lives on and is claimed to be guiding all areas of the economy-modes of operation the author has never claimed.

A good example of how twisted our reality got is medicine.
The invisible hand of the market causes pharmaceutical companies to spend most of their research dollars on things like:
- Impotence drugs and other drugs playing on our vanities
- Drugs involving life long treatment (like that of high blood pressure, lowering cholesterol), as the customer becomes a lifelong cash cow

But never on things like:
- New antibiotics. Apparently one off, lifesaving drugs don’t pay.
- Drugs that deal with the cause of our epidemics. We much prefer to mask the symptoms
- Anything natural, low cost, easily reproducible. No royalties, no help. An illustration of that is below:
Hundreds of thousands of chidren in the poorest countries die of dehydration! Because there is no clean drinking water, they get incessant diarrhoea which saps their bodies of water. If one survives these bouts in childhood, they get stronger and are OK as adults..all they need is a bit of help when at a vulnerable age.
A simple intravenous drip to replenish their bodies with water would save them, but most people can’t even afford that.
It turns out that some lab in Korea found out that an easy to make mix of water, sugar and salt, when mixed in the right proportions allows the bodies of these children to absorb it sufficiently quickly to survive the bouts. Water, sugar and salt…when would the high tech corporations come up with that one? Yet in the next few years millions of childen will be saved, more than any improvement in any drug produced by them, no matter at what cost.

Are we still holding onto the magic of the market? When the nightmare gets sufficiently bad, we will we realise that it is nothing but a bedtime story.

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