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Beyond the Invisible Hand:
Groundwork for a New Economics
Kaushik Basu

Book Description | Reviews
Chapter 1 [in PDF format]


Preface ix

Chapter 1: In Praise of Dissent 1
Discontent and Discourse 1 Smith's Myth 9 The Lay of the Land 11
On Understanding 13

Chapter 2: The Theory of the Invisible Hand 16
Competition and Social Welfare 16
The Standard Critiques 20

Chapter 3: The Limits of Orthodoxy 24 The Dual Interpretation 24
Evolving Feasible Set 27
Evolving Preference 31
Social Norms and Culture 33
A Comment on Incentive Compatibility 41
On Methodological Individualism 43
On Knowledge 49

Chapter 4: The Economy according to Law 55 Kafka's Invisible Hand 55
Law's Economy: The Standard View 57
The Law as Focal Point 60
Implications of the Focal View of Law 66
A Game-Theoretic Illustration of Law as Focal Point 71
A Research Agenda 73

Chapter 5: Markets and Discrimination 77
Do Free Markets Reduce Discrimination? 77
The Literature 79
The Self-Reinforcement of Productivity 83
The Entrepreneur 85
Toward a New Theoretical Model 89
Appendix: Aptitude Test Administered to Slum Children at Anandan in Calcutta 95

Chapter 6: The Chemistry of Groups 97
Identity and Methodological Individualism 97
The Ingredients of Theory 101
Altruism, Trust, and Development 104
The Janus Face of In-group Altruism 110
The Malignancy of Identity 120

Chapter 7: Contract, Coercion, and Intervention 130
Principle of Free Contract 130
Coercion and Voluntariness 138
The Large Numbers Argument 141
Acts and Rules 148
Multiple Equilibria 153
Domains of Intervention 155

Chapter 8: Poverty, Inequality, and Globalization 157
Governance and the Globe 157
Inequality 158
Some Facts of Globalization 161
Some Analytics of Globalization 165
Inequality and Poverty: The Quintile Axiom 167
Poverty-Minimizing Inequality, with or without Globalization 171
Policy Implications 176

Chapter 9: Globalization and the Retreat of Democracy 180
Democracy in Deficit 180
Globalization and Influence 185
Dollarization and Democracy 187
Democratic Global Institutions 189

Chapter 10: What Is to Be Done? 193
Interpreting the World and Changing It 193
The'Environmental Case' against Inequality 199
Despair and Hope 208

Notes 213
References 235
Index 259

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File created: 4/21/2017

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