The Invisible Hand in Economics
How Economists Explain Unintended Social Consequences
Routledge – 2008 – 256 pages
This is a book about one of the most controversial concepts in economics: the invisible hand. The author explores the unintended social consequences implied by the invisible hand and discusses the mechanisms that bring about these consequences.
The book questions, examines and explicates the strengths and weaknesses of invisible-hand explanations concerning the emergence of institutions and macro-social structures, from a methodological and philosophical perspective. Aydinonat analyses paradigmatic examples of invisible-hand explanations such as Carl Menger’s ‘Origin of Money’ and Thomas Schelling’s famous checkerboard model of residential segregation in relation to contemporary models of emergence of money and segregation. Based on this analysis, he provides a fresh look at the philosophical literature on models and explanation and develops a philosophical framework for interpreting invisible-hand type of explanations in economics and elsewhere. Finally, the author applies this framework to recent game theoretic models of institutions and outlines the way in which they should be evaluated.
"This is a significant contribution to the philosophy of social science which will also engage the interest of reflective economic theorists."
Robert Sugden, University of East Anglia, UK
"The book is a candidate to become compulsory reading for methodologists and philosophers of science, as well as for those economists who take seriously the issue of their models’ epistemological foundations."
Nicola Giocoli, University of Pisa, Italy
"This is a book that cannot fail to provoke thoughtful reactions from its readers about the potentialities of explanation in economics."
Mark Blaug, Erasmus University
Erasmus Journal for Philosophy and Economics
1. Introduction 2. Unintended Consequences 3. The Origin of Money 4. Segregation 5. The Invisible Hand 6. The Origin of Money Reconsidered 7. Models and Representation 8. Game Theory and Conventions. Conclusion
N. Emrah Aydinonat is Lecturer in philosophy of economics and economic growth at Ankara University, Turkey.