Publisher's Note

Diminishing the benevolence of the invisible hand

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The optimal economic outcomes such as the efficient allocation of resources, optimal distribution of income, sustained economic growth and macroeconomic stability with full employment and low inflation, is what we aspire for, I presume.

In my daily encounters, I am consistently confronted with the big questions of the economy, poverty traps, education, inequality and unemployment levels. The easiest answer and most convenient reaction is to blame and point fingers at those who have seized the levers of power and their equivalents who control the capital and who have amassed wealth for themselves. The difficult option is to dig deep and acquire the necessary information, knowledge and intellect to make an honest attempt at a genuine answer and solution. When it comes to perverse inequality and poverty traps, the temptation is towards blaming the creator. Neither of these answers cut it. Without sounding like a prophet of doom, South Africa is becoming famous as the most unequal society on Earth.

The search for answers is obfuscated by loud and deafening noises, devoid of any substance. Worse off, the noisemakers are ambidextrous. We are anxious for a time and space in which the noise will subside, sanity will prevail and, ultimately, wise counsel will emerge with credible thought and clarity of mind to offer objective solutions to the current political and economic impasse.

In his acclaimed publication, The Theory of Moral Sentiments, Adam Smith, with his usual perspicuity and philosophical accuracy, posits that “The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own convenience. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.’

The deleterious economic impasse cannot be ignored and, unfortunately, there seem to be more questions than answers. The promise of the Fourth Industrial Revolution seems to be creating the super rich and entrenching the majority into poverty.

The invisible hand seems to have lost its shine and glory, it is not redistributing sufficiently and, thus, the benefits of its benevolence are diminishing.

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Issue 414


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