![]() I will - I’ll begin, as I said, with a recapitulation. Rae: Since we are still in the shopping period and some turnover, I thought it might be good if I spent the first three or four minutes recapitulating from meeting one, and then a little more on meeting two, and then we’ll feather that into today’s topic, which is the great work of economics, and the great - the greatest and most thoughtful normative tract about markets and capitalism. Professor Rae also discusses Adam Smith’s complicated ideas about self-interest and morality.Ĭapitalism: Success, Crisis, and Reform PLSC 270 - Lecture 3 - Counting the Fingers of Adam Smith's Invisible Hand Corporations can leverage powerful political influence to affect the movements of the “invisible hand.” Guest speaker Jim Alexander, formerly of Enron, discusses problems of very imperfect information, as well as the principal-agent problem. Professor Rae suggests that submission to Adam Smith’s invisible hand may be contrary to basics of corporate strategy. ![]() ![]() These principles include avoiding direct competition, establishing high barriers to entry, and avoiding powerful buyers and powerful suppliers. However, many of these preconditions are at odds with the Porter Forces, which represent general rules of thumb, or principles, for a firm trying to make above average profits. Governments must enforce property and contracts. No producer can hold a pivotal private technology, and there must be more or less truthful information across the whole market. Markets must be open, and there cannot be just one buyer or one seller who can control product prices. Several preconditions must be met for the invisible hand to work. Professor Rae introduces Adam Smith’s notion of the “invisible hand” of the market. Lecture 3 - Counting the Fingers of Adam Smith's Invisible Hand Overview
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