The high priest of the Cult of the Invisible Hand: Adam Smith
I have a friend who is a staunch conservative and who is an unabashed devotee of Adam Smith. In a recent conversation about the economy, my friend turned to me and repeated a mantra that I hear from many folks who belong what I like to call The Cult of the Invisible Hand.
"For starters, economic conditions are not really that bad, and definitely not as bad as the Great Depression," he intoned. "But the big problem is the media, which keeps feeding us these 'hard times' stories and putting people into a frenzy about the coming End of the World and all that."
When he gets like this, I usually segue into a less fractious topic of conversation, like college football, since my friend is utterly doctrinaire in his approach to politics and economics. Like other devotees of the religion of capitalism, he cannot be shaken from his fervent belief that free markets are the Alpha and Omega of human existence.
I would be more successful trying to demolish a masonry wall with my forehead than I would to change my friend's opinions on matters related to capitalism.
Anyways, I found intriguing the premise that the media somehow creates, perpetuates, and worsens economic recessions and depressions. Certainly as a primary conveyor of information, the media makes investors aware of market trends, and perhaps there could be some truth that greater media attention paid to the economy might reinforce existing financial anxiety.
However, I think that my friend and other like him simply do not like to acknowledge the fact that capitalism has flaws far beyond any caused by media hype or, for that matter, government intervention in the economy. Not only do we live in an era of global markets that operate with a complexity beyond human comprehension, we also live in an age when trading is increasingly performed by computers that have been programmed to buy and sell at preordained prices and market conditions.
Hypercapitalism, I like to call this.
Of course, it is reassuring to simply blame the usual demons - like Democrats and the media and liberals - than it is to question one's faith systems. The idea that there could be alternatives to capitalist economics is in itself a form of heresy, and triggers the Pavlovian response that such an apostate must be, therefore, a Communist or Marxist.
I am neither, and yet as a historian I know that capitalism will eventually run its course in the manner of all anachronistic systems and be replaced by...something else. Certainly Soviet-style communism did not pan out, nor did the visions of socialism espoused by Mao or Pol Pot. Yet we are not limited to considering alternatives to capitalism that are derived from failed communist states.
I am thinking here of the coming post-monetary world, as we evolve from people hoarding bits of shiny metal and slips of paper into people who develop a more rational method of economic exchange. I try to picture a world in which herd mentality or gloomy media reports cannot weaken an economic system, or where capital flight cannot wreck entire economies, like the 1997 Asian financial crisis or the 2001 implosion of the Argentine austral.
I do not delude myself that a harmonious Utopia is just around the corner, but I find equally absurd the notion that the scribbled musings of a long-dead Scottish political economist should be accepted as revealed truth.