The Invisible Hand in Economics: How economists explain unintended social consequences - ISBN:041541783X

The Invisible Hand in Economics: How economists explain unintended social consequences

Date: 21 April 2011, 12:42

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Why do people abide by rules (think of traffic rules, for example)? Because they know that if they transgress the rules there is a chance they will be caught in the act, and because they also know that if they are caught in the act they will be punished. Why is there a system of punishing transgressors in the first place? Well, because some (particularly those with the requisite powers and authorities) thought it a good idea to install such a system. This way of explaining social, aggregate behaviour in terms of the intentions and expectations of the people producing the behaviour seems to make perfectly good sense. Nobody would deny that this is roughly how desirable social, aggregate behaviour (in this case, people by and large abiding to the rules) often is secured. But it also has a trivial ring over it. If this type of explanation were the only type available to (and actually practised by) social scientists, then this would make them vulnerable to the oftcited charge that social science is not able to go beyond mere common sense (or ‘folk’) understandings.

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