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    Azmaine Sanjan
    The document discusses how capitalism requires both an invisible hand and a visible hand to function effectively over time. The invisible hand refers to market price mechanisms that coordinate supply and demand. However, for capitalism to evolve developmentally, it also needs the visible hand of government. Government has two roles - administering existing frameworks and mobilizing power to modernize frameworks as needs change. For capitalism to develop successfully, both market forces and strategic government intervention are necessary.

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    Overview

    Uploaded by

    Azmaine Sanjan
    27 views2 pages
    The document discusses how capitalism requires both an invisible hand and a visible hand to function effectively over time. The invisible hand refers to market price mechanisms that coordinate supply and demand. However, for capitalism to evolve developmentally, it also needs the visible hand of government. Government has two roles - administering existing frameworks and mobilizing power to modernize frameworks as needs change. For capitalism to develop successfully, both market forces and strategic government intervention are necessary.

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    political economy

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    The document discusses how capitalism requires both an invisible hand and a visible hand to function effectively over time. The invisible hand refers to market price mechanisms that coordinate supply and demand. However, for capitalism to evolve developmentally, it also needs the visible hand of government. Government has two roles - administering existing frameworks and mobilizing power to modernize frameworks as needs change. For capitalism to develop successfully, both market forces and strategic government intervention are necessary.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    27 views2 pages

    Overview

    Uploaded by

    Azmaine Sanjan
    The document discusses how capitalism requires both an invisible hand and a visible hand to function effectively over time. The invisible hand refers to market price mechanisms that coordinate supply and demand. However, for capitalism to evolve developmentally, it also needs the visible hand of government. Government has two roles - administering existing frameworks and mobilizing power to modernize frameworks as needs change. For capitalism to develop successfully, both market forces and strategic government intervention are necessary.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    Overview Capitalism is often defined as an economic system where private actors are allowed

    to own and control the use of property according to their own interests, and where the invisible
    hand of the pricing mechanism coordinates supply and demand in markets in a way that is
    automatically in the best interests of society. Government, in this perspective, is often described
    as responsible for peace, justice, and tolerable taxes. Bruce Scott argues in this chapter that for a
    capitalist system to evolve in an effective developmental sense through time, it must have two
    hands, not one: an invisible hand that is implicit in the pricing mechanism, and a visible hand
    that is explicitly managed by government through a legislature and a bureaucracy. Inevitably the
    actions of the visible hand imply a strategy, no matter how implicit, shortsighted, or incoherent
    that strategy may be. Key concepts include:

    Government has two quite different roles to play in a capitalist economy, as an


    administrator of an ongoing system and as an innovator.

    Political leaders have prime responsibility for mobilizing the power to promote changes
    to the system.

    Capitalism has two hands, first the familiar if invisible hand of price mechanisms that
    coordinate economic actors within current frameworks, and second the visible hand of
    government, where it is both an administrator and an innovator.

    The visible hand of the state must be able to intervene in order to modernize market
    frameworks in a timely way, while at the same time administering and enforcing existing
    rights and responsibilities as a complement to the invisible hand.

    Author Abstract
    Capitalism is often defined as an economic system where private actors are allowed to own and
    control the use of property in accord with their own interests, and where the invisible hand of the
    pricing mechanism coordinates supply and demand in markets in a way that is automatically in
    the best interests of society. Government, in this perspective, is often described as responsible for
    peace, justice, and tolerable taxes.

    This paper defines capitalism as a system of indirect governance for economic relationships,
    where all markets exist within institutional frameworks that are provided by political authorities,
    i.e., governments. In this second perspective capitalism is a three level system much like any
    organized sports. Markets occupy the first level, where the competition takes place; the
    institutional foundations (e.g., rules, referees, infrastructure) that underpin those markets are the
    second; and the political authority that administers the system is the third (e.g., the NFL, NBA or
    FIFA). While markets do indeed coordinate supply and demand with the help of the invisible
    hand in a short term, quasi-static perspective, government coordinates the modernization of
    market frameworks in accord with changing circumstances, including changing perceptions of
    societal costs and benefits. In this broader perspective government has two distinct roles, one to
    administer the existing institutional frameworks, including the provision of infrastructure and the
    administration of laws and regulations, and the second to mobilize political power to bring about
    modernization of those frameworks as circumstances and/or societal priorities change.

    For a capitalist system to evolve in an effective developmental sense through time, it must have
    two hands and not one: an invisible hand that is implicit in the pricing mechanism and a visible
    hand that is explicitly managed by government through a legislature and a bureaucracy.
    Inevitably the actions of the visible hand imply a strategy, no matter how implicit, short sighted
    or incoherent that strategy may be.

    This working paper is a draft of Chapter 2 of a manuscript titled Capitalism, Democracy and
    Development.

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