A key introductory economic concept, brought to us from Adam Smith, is the invisible hand that manages the workings of the market economy. However, is the current financial crisis an indication that the invisible hand has failed us? Should we be looking more at the invisible heart of community when we try to build an economic system? The first article linked below look at whether we may be more successful at delivering economic happiness and welfare if we follow the invisible heart rather than the invisible hand.
This way happiness lies Guardian (19/10/08)
Why do we need economic growth? BBC Magazine (16/10/08)
Questions
| 1. | Explain how the ‘invisible hand’ allocates economic resources in a market economy. |
| 2. | Assess whether the current financial crisis may indicate that the invisible hand has failed to allocate resources appropriately. |
| 3. | Discuss whether the pursuit of economic happiness may be more appropriate than the pursuit of economic growth. |