Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-First Century

By Ebeling, Richard M. | Freeman, October 2006 | Go to article overview

Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-First Century


Ebeling, Richard M., Freeman


Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-First Century by Deepak La Princeton University Press * 2006 * 320 pages * $29.95

UCLA economics professor Deepak Lal is one of the most articulate defenders of the free market and an outspoken critic of interventionist and welfare-state polices around the world.

Over 20 years ago, when central planning was still considered a panacea for economic development in third-world countries, Lal published The Poverty of "Development Economics" (1983), a devastating critique of collectivist ideas and policies then dominant in underdeveloped countries. More recently, in Unintended Consequences (1998) he traced the unique institutional changes in Medieval Europe that led the West out of poverty.

In his latest book, Reviving the Invisible Hand, Lal explains why the world has only one hope for a free and prosperous future-the politics of classical liberalism and the economics of a radically free market. While well trained in mainstream neoclassical economics, he rejects many aspects of the textbook equilibrium models for a more realistic conception of man and markets derived from the classical economists and more modern theorists, such as the Austrian economists F. A. Hayek and Joseph Schumpeter.

Incorporating as well insights of the Public Choice theorists, Lal demonstrates why governments should not be viewed as manned by "Platonic Guardians" only concerned with some hypothetical common good. Rather, government should be viewed as full of predators using the coercive powers of the state to plunder others.

Lal then debunks many of the theoretical and factual myths of the day. He shows that both in the nineteenth-century heyday of classical liberalism and in the post-World War II period, the freer the trade among nations, the greater the benefit for all. Nineteenth-century laissez faire brought rising living standards and more market opportunities not only for the wealthy few, but also for the poor. The result was a growing middle class. Nor did free trade and enterprise harm the poor in underdeveloped countries. The more integrated they have become with Western economies, the greater and the more rapid their climb from economic desperation.

Accusations of the increasing "income gap" between rich and poor, both within developing countries and between them and Western nations in recent years, are shown to be based on either false or misused data. Indeed, Lal explains that more people than ever are now outside any reasonable measurement of poverty.

Precisely because it is possible to end poverty, Lal turns his analytical guns against the anti-capitalist and anti-globalization groups that have infiltrated non-governmental organizations (NGOs), as well as the United Nations, the World Bank, and many other international agencies. At the core of this opposition to a free market is the environmental movement. In a brilliant tour de force Lal demolishes each of their doomsday nightmares. For example, he draws on the relevant scientific evidence to argue that there is no catastrophic global warming and no significant climate change caused by industrialization. …

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