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Beyond the Invisible Hand : Groundwork for a New Economics - Kaushik Basu

Beyond the Invisible Hand

Groundwork for a New Economics

Hardcover

Published: 14th November 2010
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One of the central tenets of mainstream economics is Adam Smith's proposition that, given certain conditions, self-interested behavior by individuals leads them to the social good, almost as if orchestrated by an invisible hand. This deep insight has, over the past two centuries, been taken out of context, contorted, and used as the cornerstone of free-market orthodoxy. In "Beyond the Invisible Hand," Kaushik Basu argues that mainstream economics and its conservative popularizers have misrepresented Smith's insight and hampered our understanding of how economies function, why some economies fail and some succeed, and what the nature and role of state intervention might be. Comparing this view of the invisible hand with the vision described by Kafka--in which individuals pursuing their atomistic interests, devoid of moral compunction, end up creating a world that is mean and miserable--Basu argues for collective action and the need to shift our focus from the efficient society to one that is also fair.

Using analytic tools from mainstream economics, the book challenges some of the precepts and propositions of mainstream economics. It maintains that, by ignoring the role of culture and custom, traditional economics promotes the view that the current system is the only viable one, thereby serving the interests of those who do well by this system. "Beyond the Invisible Hand" challenges readers to fundamentally rethink the assumptions underlying modern economic thought and proves that a more equitable society is both possible and sustainable, and hence worth striving for.

By scrutinizing Adam Smith's theory, this impassioned critique of contemporary mainstream economics debunks traditional beliefs regarding best economic practices, self-interest, and the social good.

"Alluring... [Basu's] latest book, subtitled Groundwork for a New Economics, aims to show that many economists have dogmatically accepted capitalist theories as fact and have failed, as a result, to scrutinize their own discipline... Basu devotes the bulk of the text to deconstructing some sacrosanct tenets of capitalism that have become entrenched in government policy over the past 60 years."--Timothy R. Homan, Bloomberg "A most interesting and ... a most significant book... Basu's book is the first serious study of the modern myth related to the 'Invisible Hand' I have seen anywhere."--Gavin Kennedy, Adam Smith's Lost Legacy "Basu has rethought and modernized socialism in this book. He has done so without cluttering it up with Marxist jargon or abstract mathematics; the worst the reader will encounter in this book is game theory, which, though it is not all fun and games, is pretty easy to follow. It is a book worth reading by the socialist types who run our country, as well as those who need to understand socialism to dissent from it."--Business World "[A] very rewarding read... This is Basu's most ambitious and rewarding book, and it works--there's no public policy debate in India it's not relevant to."--The Economic Times "This book should be read by anyone interested in economics for its in-depth thinking, although its targeted readership is more basically professional economists."--Wladimir Andreff, European Legacy "Beyond the Invisible Hand will be useful to political economists who want to see how game theory can shed light on the ways that groups and races of rational actors may assume surprising dynamics. It could also be useful to policymakers who must justify arguments about group policies in standard economic terms. [The] author's contributions to political economy deserves to be taken seriously."--Jonathan Schlefer, Perspectives on Politics

Prefacep. ix
In Praise of Dissentp. 1
Discontent and Discoursep. 1
Smith's Mythp. 9
The Lay of the Landp. 11
On Understandingp. 13
The Theory of the Invisible Handp. 16
Competition and Social Welfarep. 16
The Standard Critiquesp. 20
The Limits of Orthodoxyp. 24
The Dual Interpretationp. 24
Evolving Feasible Setp. 27
Evolving Preferencep. 31
Social Norms and Culturep. 33
A Comment on Incentive Compatibilityp. 41
On Methodological Individualismp. 43
On Knowledgep. 49
The Economy according to Lawp. 55
Kafka's Invisible Handp. 55
Law's Economy: The Standard Viewp. 57
The Law as Focal Pointp. 60
Implications of the Focal View of Lawp. 66
A Game-Theoretic Illustration of Law as Focal Pointp. 71
A Research Agendap. 73
Markets and Discriminationp. 77
Do Free Markets Reduce Discrimination?p. 77
The Literaturep. 79
The Self-Reinforcement of Productivityp. 83
The Entrepreneurp. 85
Toward a New Theoretical Modelp. 89
Appendix: Aptitude Test Administered to Slum Children at Anandan in Calcuttap. 95
The Chemistry of Groupsp. 97
Identity and Methodological Individualismp. 97
The Ingredients of Theoryp. 101
Altruism, Trust, and Developmentp. 104
The Janus Face of In-group Altruismp. 110
The Malignancy of Identityp. 120
Contract, Coercion, and Interventionp. 130
Principle of Free Contractp. 130
Coercion and Voluntarinessp. 138
The Large Numbers Argumentp. 141
Acts and Rulesp. 148
Multiple Equilibriap. 153
Domains of Interventionp. 155
Poverty, Inequality, and Globalizationp. 157
Governance and the Globep. 157
Inequalityp. 158
Some Facts of Globalizationp. 161
Some Analytics of Globalizationp. 165
Inequality and Poverty: The Quintile Axiomp. 167
Poverty-Minimizing Inequality, with or without Globalizationp. 171
Policy Implicationsp. 176
Globalization and the Retreat of Democracyp. 180
Democracy in Deficitp. 180
Globalization and Influencep. 185
Dollarization and Democracyp. 187
Democratic Global Institutionsp. 189
What Is to Be Done?p. 193
Interpreting the World and Changing Itp. 193
The 'Environmental Case' against Inequalityp. 199
Despair and Hopep. 208
Notesp. 213
Referencesp. 235
Indexp. 259
Table of Contents provided by Ingram. All Rights Reserved.

ISBN: 9780691137162
ISBN-10: 0691137161
Audience: Tertiary; University or College
Format: Hardcover
Language: English
Number Of Pages: 312
Published: 14th November 2010
Publisher: Princeton University Press
Country of Publication: US
Dimensions (cm): 24.1 x 16.7  x 2.4
Weight (kg): 0.54