Visible hand (economics)

For a book by American business historian Alfred D. Chandler Jr., see The Visible Hand.
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The "visible hand"[1] is an economic concept describes the replacement of the regulatory function of the market mechanism by government intervention.[2] Simply put, it refers to government intervention.[3]

In economics the "visible hand" is generally considered to be the macro-fiscal policy of John Keynes that emerged in the 1930s as a remedy for the shortcomings of Adam Smith's "invisible hand" and advocated government intervention in the economy.[4] Actually, Smith already identified the disadvantages of the "invisible hand".[5] Since then, economists have been building on his insights to explain when and why markets get into trouble and how the visible hand of the government can enable the invisible hand to be more effective.[6]

In the 1930s Keynes and other economists became clearly aware of the problems of the market economy. He called these problems "market failure" and introduced the idea of adding a "visible hand" to Smith's "invisible hand" to strengthen the regulation of the market economy.[7] Mariana Mazzucato has argued that the "visible hand" fosters innovation.

  1. ^ Manas Chatterji (March 2, 2017). Economic Globalization in Asia. Routledge. pp. 10–. ISBN 978-1-351-94189-1.
  2. ^ Yu Zongxian; Wang Jinli (November 30, 2003). A Visible Hand. Linking Publishing Co., Ltd. pp. 3–. ISBN 978-957-08-2645-6.
  3. ^ "Abbott's message to the world: governments should stand back". The Conversation. January 24, 2014.
  4. ^ "Theoretical Economics". Theoretical Economics: 33–. 2002. ISSN 1005-4286.
  5. ^ Jacob S. Hacker and Paul Pierson. "Making America Great Again : The Case for the Mixed Economy". Foreign Affairs. March 21, 2016.
  6. ^ Jacob S. Hacker; Paul Pierson (February 14, 2017). American Amnesia: How the War on Government Led Us to Forget What Made America Prosper. Simon and Schuster. pp. 4–. ISBN 978-1-4516-6783-7.
  7. ^ Jiang Chang (2004). Towards Elegant Survival: A Study of Social Value Choices in 21st Century China. China Social Sciences Press. pp. 186–. ISBN 978-7-5004-4467-1.