Charles Darwin vs. Adam Smith

James Galbraith is trying to debunk the idea of the "invisible hand."

More than a century later, economics has not escaped its pre-Darwinian rut. Economists still don't understand variation; instead they write maddeningly about "representative agents" and "rational economic man." They still teach the "marginal product theory of wages," which excuses every gross inequality faced by the laboring poor. Alan Greenspan even recently resurrected the idea of a "natural rate of interest" to justify raising rates, though that doctrine had been extinct for 70 years. Economists still ignore the diversity of actual economic and social life. They say little about forms of ownership and the distribution of power, and almost nothing about how pointless product differentiation and technical change now shape and drive the struggle for survival among firms.

Metaphysics still persists in economics. It takes the form of "competitive equilibrium"-the conditions under which selfish individuals and tiny small businesses in free competitive markets interact to produce the best results for social welfare. Competitive equilibrium is a state of perpetual economic stagnation, its study an exercise in mental stasis. This is because there is nothing to study: The idea dominates textbooks and journals but has never existed in real life.

Interesting. I've seen these kinds of theories before, but I confess that I don't know enough about economics to know if they are kooky or cutting-edge. Sure I had a few econ courses for my MBA but this stuff is digging in deep.