Bernanke to replace Greenspan

According to market fundamentalists, the Invisible Hand takes care of everything. This is a basic conservative doctrine derived from Adam Smith, which amounts to "God will Provide."

Of course, hard-headed businessmen don't feel relying on the gods is a good bet; they want better assurance of success. The Chicago School has provided that certainty with their formulae: mathematical models that embody the assumptions of neo-classical economics. While that seems to be helpful in running some companies, particularly those engaged in old-fashioned manufacturing or resource extraction, neo-classical models do not make other corporate mangers feel secure. For those managers, choice is a problem: people could refuse to buy their products. They solve the problem with market research, advertising and other forms of market manipulation, the result of which is to nearly guarantee the success of their products. Corporate managers only rely on Invisible Hands out of desperation, after everything else fails.

If the formulas work, why does the Federal Reserve Chairman matter? In neo-classical principle, it shouldn't. Anyone sufficiently versed in the models (including this writer) should be able to perform those central banking duties. But that is not what people on Wall St or in corporate Board rooms believe: they are very concerned about who fills the office. They want someone who will take their cause to heart. Bernanke is one of theirs, so they support him. The supposed practitioners of neo-classical economics don't use those models in their real works; they do things by 'the seat of their pants' (which is what Prof J. K. Galbraith observed).

This should be another revealing moment for those willing to attend the lesson. The American economy is run by a clique of people, not formulae and machines. The theory is a convenient cover story for the gullible.