Two optimistic traditions in the dismal science: rationalism and the "invisible hand"

Stellenbosch Working Paper Series No. WP07/2007
 
Publication date: 2007
 
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch)
 
Abstract:

This paper explores two traditions of optimism in economics. In one of these traditions optimism is based on the comprehension of a spontaneous (and often progressive) order in a decentralised (or market) economy – what I will call the optimism of the “invisible hand”. Against the optimism of the invisible hand stands another optimistic tradition in economics, whereby we might take courage from our ability to do right by society through instructing governments with the keen edge of our most enlightened plans. This tradition is called “constructivist rationalism” here. The paper explores the logic of each tradition and their historical development and applies both to a recent example of policy making in South Africa: government’s fundamental regulatory overhaul of the pharmaceutical industry based on the Medicines Act of 1997, specifically, the decision to implement price controls on medicines.

 
JEL Classification:

N10, N17, O40, O47, O49, O55

Keywords:

Spontaneous order, Modernism, Planning, Optimism, Information, Uncertainty, Price controls, Institutions, Constitutions, Law and Economics

Download: PDF (261 KB)

Login

(for staff & registered students)



Need a password?
Forgot your password?

Upcoming Seminars

No seminars are currently listed. Please check back soon.
 
More...

BER Weekly

17 May 2024
This week was another poor showing on the local industrial data front, with internal trade data mixed. While we still see very subdued quarterly growth, there is an increased possibility that the economy may have stagnated or tipped into a contraction in 2024Q1 relative to 2023Q4. Policy was also in focus as President Cyril Ramaphosa signed the National...

Read the full issue
 

Upcoming Seminars

No seminars are currently listed. Please check back soon.
 
More...

BER Weekly

17 May 2024
This week was another poor showing on the local industrial data front, with internal trade data mixed. While we still see very subdued quarterly growth, there is an increased possibility that the economy may have stagnated or tipped into a contraction in 2024Q1 relative to 2023Q4. Policy was also in focus as President Cyril Ramaphosa signed the National...

Read the full issue