Chomsky on ‘The Invisible Hand’

I got this in my email box today:

Radio Free Maine
Noam Chomsky
speaking on
The Militarization of Science and Space

Response from Noam Chomsky to a question about the
invisible hand in capitalistic market forces.
Recorded by Roger Leisner on February 15, 2004.
To order this recording, go to

First of all, you know what we have today does not
remotely resemble what’s supposed to be capitalism.
Capitalism is supposed to be what Jagdish Bhagwati
was discussing in this abstract model he had in mind
in the op-ed this morning. And what you study in
neo-classical economics with free markets and
entrepreneurial initiative and consumer choice, what
Greenspan is talking about, but we don’t have anything
resembling that.

I should say that even that one quote I gave about
oligarchic competition, strategic integration, etc.,
etc. It said that’s what we have, not the “invisible
hand” of the market.

Well, I don’t know how many of you have ever read
“Wealth of Nations”, the famous, what you’re supposed
to worship at. The phrase “invisible hand” does
appear in “Wealth of Nations”, exactly once. And it’s
an argument against what’s now called “globalization”.
It’s an argument against free movement of capital.
Smith argues that argument that although it would be
very harmful to England, what he cared about, it will
be stopped by an “invisible hand” because merchants
and manufacturers will have a home bias. They’ll
prefer to invest at home. So, don’t worry about it,
even though it’s dangerous. That’s the one use of the
term in “Wealth of Nations”.

You know, so what we have is nothing like capitalism.
But can we have a system in which the poor benefit and
the rich don’t have to be made happy. Why not?!?

There’s not a law of nature that the economy, hence
most of the society and the political system, are in
the hands of high concentrations of capital which are
granted by the state. They’re granted by state power,
enormous rights. You know rights that are granted to
corporations are an incredible blow against classical
liberalism and classical economics. Adam Smith would
turn over in his grave to see what’s been granted to
these basically totalitarian systems. And they have
basically been granted the rights, not only of
persons, which is outlandish, but of pathological
persons. They’re required by law to be utterly
pathological. It’s a legal requirement, deeply
embedded in anglo-american corporate law. That the
managers of corporations must be brutal. They must be
the kind of persons who we would lock up if they were
flesh and blood. They got to, they’re only, they are
legally required to maximize profit and market share
and not to do anything decent. The only exception,
and it’s a long history of corporate law, is they’re
allowed to do something decent if it’s hypocritical.
So, if a pharmaceutical corporation wants to improve
its image by giving free drugs to people in Africa or
something, it’s allowed to do it as long as it’s pure
hypocrisy. That is, it is a way to improve your image
to increase profit. Otherwise, it’s legally culpable.
You’re much more likely to get thrown in jail for that
than, you know, ENRON style corruption. And I think
that’s really the core of the system.

Well, you know, that’s just, it’s not even
legislation, these are just decisions by courts.
Which have become the core. Do we have to accept
that?!? Almost like saying that people had to accept
bolshevism or fascism or other kinds of
totalitarianism. Of course not!!!

Makes me want to rush right out and buy the recording….

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