Über die Autorin bzw. den Autor

Kaushik Basu is professor of economics and the C. Marks Professor of International Studies at Cornell University. He is currently chief economic advisor to the Ministry of Finance of the Government of India. His books include Prelude to Political Economy: A Study of the Political and Social Foundations of Economics and Of People, of Places: Sketches from an Economist's Notebook.

Von der hinteren Coverseite

"Deftly, with the carefully chosen anecdote, and the sparing but subtle thought experiment, Kaushik Basu again and again dispels the myth that the invisible hand of free markets leads to the best of all possible worlds--indeed, often far from it. With great wisdom, Beyond the Invisible Hand describes the frequently shocking consequences of the free markets of modern economic theory; it also sets the agenda for where that theory needs to go next."--George A. Akerlof, Nobel Laureate in Economics and coauthor of Animal Spirits and Identity Economics

"In this remarkable tour de force, Kaushik Basu scrutinizes the foundational assumptions of economics and asks new and important questions. In his quest for a better and more equitable society, Basu leaves no room for complacency. This thought-provoking book will generate debate in the economics profession and beyond."--Justin Yifu Lin, chief economist, World Bank

"Beyond the Invisible Hand poses a fundamental challenge to the way that economists think about many of the most important issues of economic theory and policy. Written for both economists and educated laymen, the book lays out a new vision for economics, one that will stimulate the reader to rethink current practice and give deeper consideration to issues often slighted in contemporary economic analysis. While the reader may not always agree with Basu's prescriptions, the importance of his contribution to the debate over the future of economics cannot be ignored."--Steven G. Medema, University of Colorado, Denver

"With standard economic perspectives under question, the need for alternative perspectives is great. Eminently readable and timely, this book is appropriate for general readers and professional economists."--Arjo Klamer, Erasmus University

Aus dem Klappentext

"Deftly, with the carefully chosen anecdote, and the sparing but subtle thought experiment, Kaushik Basu again and again dispels the myth that the invisible hand of free markets leads to the best of all possible worlds--indeed, often far from it. With great wisdom, Beyond the Invisible Hand describes the frequently shocking consequences of the free markets of modern economic theory; it also sets the agenda for where that theory needs to go next."--George A. Akerlof, Nobel Laureate in Economics and coauthor of Animal Spirits and Identity Economics

"In this remarkable tour de force, Kaushik Basu scrutinizes the foundational assumptions of economics and asks new and important questions. In his quest for a better and more equitable society, Basu leaves no room for complacency. This thought-provoking book will generate debate in the economics profession and beyond."--Justin Yifu Lin, chief economist, World Bank

"Beyond the Invisible Hand poses a fundamental challenge to the way that economists think about many of the most important issues of economic theory and policy. Written for both economists and educated laymen, the book lays out a new vision for economics, one that will stimulate the reader to rethink current practice and give deeper consideration to issues often slighted in contemporary economic analysis. While the reader may not always agree with Basu's prescriptions, the importance of his contribution to the debate over the future of economics cannot be ignored."--Steven G. Medema, University of Colorado, Denver

"With standard economic perspectives under question, the need for alternative perspectives is great. Eminently readable and timely, this book is appropriate for general readers and professional economists."--Arjo Klamer, Erasmus University

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

BEYOND THE INVISIBLE HAND

PRINCETON UNIVERSITY PRESS

Contents

Preface..................................................................ixChapter 1 In Praise of Dissent...........................................1Chapter 2 The Theory of the Invisible Hand...............................16Chapter 3 The Limits of Orthodoxy........................................24Chapter 4 The Economy according to Law...................................55Chapter 5 Markets and Discrimination.....................................77Chapter 6 The Chemistry of Groups........................................97Chapter 7 Contract, Coercion, and Intervention...........................130Chapter 8 Poverty, Inequality, and Globalization.........................157Chapter 9 Globalization and the Retreat of Democracy.....................180Notes....................................................................213References...............................................................235Index....................................................................259

Chapter One

Discontent and Discourse

By most counts, the world is a better place today than it was in ancient times. First and foremost, we have the comforts that come from our greater collective wealth. But even apart from that, we do not live in perpetual fear that another nation's marauding army will come and take away our land and belongings. When we return home from dining out, we do not expect to find that strangers have broken in and occupied our homes. The physically weak do not have to be reconciled to being economically destitute. There are numerous rights of individuals and nations that are presently treated as fundamental and inviolable. We do not have to be on constant guard to defend these rights by force or guile. Others recognize the rights and usually respect them, and when they do not, the community or the state usually enforces them.

It would be a tortuous claim to say that we are not, on average, more fortunate than our ancestors. It will be argued in this book, however, that we are not as fortunate as may appear at first sight. The fact that the exploitation of the twenty-first century occurs within the laws and norms of the twenty-first century should not make us oblivious to it. Even in ancient times, what appear to us today as brutal, confrontational behaviors and morally indefensible conquests were more often than not justified using the morals, norms, and practices of the times. When Plato or, closer to our time, Thomas More wrote about a utopian society in which all men were treated well and with dignity, it did not even occur to them that there might be something wrong in leaving women and slaves out of this scheme. When during the seventeenth, eighteenth, and nineteenth centuries Native Americans were systematically separated from their land, occasionally by force but frequently by what on the face of it looked like voluntary transactions—elaborate contracts that the Native Americans usually did not understand, since prior to the arrival of the Europeans they had neither experience of land trade nor written contracts—they were being exploited quite ruthlessly, as their subsequent impoverishment suggests. But it was widely believed that what was happening was lawful and morally justified (Banner 2005, especially 52–53; see also Robertson 2005).

Some accounts of these "voluntary" treaties and contracts are tragic, such as when in 1755 in South Carolina more than five hundred Cherokee met with a similar number of settlers. South Carolina Governor James Glen convened the meeting. Gifts were exchanged, and meals were served in silver bowls and cups. The Cherokee were pleased, and declared that the tribe wished to give "all their Lands to the King of Great Britain ... for they acknowledge him to be the owner of all their Lands and Waters" (Banner 2005, 59). The settlers sensed that this was a metaphoric use of language, just a way of being nice to outsiders. This was especially clear when the Cherokee refused to take any payment for their offer. But the offer was too good for the settlers to allow qualms about metaphoric speech to get in the way. To make it into a contract, the settlers persuaded the Cherokee to take a small payment, which they accepted out of politeness. Little did the Cherokee realize that they were about to lose all their land.

At one level, deals like the above one were voluntary, but the question must arise about the meaning and significance of voluntary contracts between two parties when one of them does not understand what a land sale means because it has not had any experience of that in its history. Many of the settlers considered the deals to be fair, and so did many of the natives, though of course there were settlers who were out to take ruthless advantage of the simplicity of the natives. When Christopher Columbus and his crew landed in what is now the United States (Bahamas), the Arawaks ran to greet them with food and gifts. They had no idea that Columbus viewed the whole situation as an opportunity. In Columbus's own words, "They brought us parrots and balls of cotton ... and many other things.... They do not bear arms and do not know them for I showed them a sword, they took it by the edge and cut themselves." And having noted the simplicity of these people, he went on to observe that "they would make fine servants. With fifty men we could subjugate them all and make them do whatever we want" (Zinn 2003, 1).

Likewise today, when we see the rule of law prevail, property rights as defined by our courts respected, and blatant military conquests decrease in number, we feel that what we see happening in the marketplace and our conference rooms where treaties and agreements are signed is the outcome of fair play. We know that people get cheated in markets and that individuals do get exploited, but overall, when we play by the rules of the market and do not snatch and rob, we believe we are on the right path. Some do get impoverished and some get rich. Well, we tell ourselves, this has to happen, does it not? Would trying to halt this not impede progress and economic growth? We have seen—for instance, in the Soviet Union—what happens when other systems are attempted. But history, such as the cases just discussed, should alert us that even today, there may well be other kinds of unfair contracts and treaties taking place. After all, the exchanges that happen in reality are not just of apples, haircuts, guns, and butter with money, as our textbooks suggest, but complex deals involving long stretches of the future and complicated rights. It is likely that groups are being outwitted in novel ways that will become clear to us only in retrospect.

It is arguable that if we measure inequality simply by the income gap between the richest and poorest segments of society, then the present-day world has inequality at a level that has never occurred in human history. This is because the poorest people's condition has remained much the same from ancient times. Their lives are nasty, brutish, and short—to use an abbreviated version of Thomas Hobbes's famous description of life in the state of nature; the poorest people barely get enough to survive. Their well-being is usually determined by the biological subsistence needs of human beings. Even poorer people will not be...