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

Stan Du Plessis ()

No 07/2007, Working Papers from Stellenbosch University, Department of Economics

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.

Keywords: Spontaneous order; Modernism; Planning; Optimism; Information; Uncertainty; Price controls; Institutions; Constitutions; Law and Economics (search for similar items in EconPapers)
JEL-codes: N10 N17 O40 O47 O49 O55 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-hpe and nep-law
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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