Ayadesian argument with Adam Smith’s Theory of ‘The Invisible Hand’

 

By Eval Asikong

Ayadesian principle exposes the poverty inherent in the Adam Smith’s theory of “The Invisible Hand” which proposes an automatic pricing and distribution mechanism. This is a market system that is free from planning and government’s stringent regulation. The emergence of the theory coincided with the era of industrial revolution and American independence, a time when the bourgeois aristocracies ruled and shaped global economy and even became so powerful as to determine strategic outcomes. This gave Smith the conviction that the actual wealth of nations could be achieved, maximally, if the private sector is allowed to operate without interference from conventional authorities.

Ayadesian model is of the view that it was the free industrial competition and the unchecked automatic pricing and distribution mechanism that led to the excess liquidity experienced in the 18th century, a situation when production/supply were so massive without complementary demand/purchases. This made the economy to be, unnecessarily, over saturated with excess capital and people were afraid of investing in an over saturated economy which made massively accumulated capital to remain redundant. In a simple term, production was high and patronage was low; supply was massive, but demand was very shy.

What happened next? There was unemployment because labour aristocracies were supplanted by mechines; there was hunger and tension excalated. As the already wearied and displaced Labour aristocracies were warming up to distort the system, there was the desperate search for external markets to invest these excess capital with the expectation of repatriating multipliers (both cash and natural resources) to stabilize their internal economies and improve on the living conditions of their labour aristocracies which signalled the era of colonialism. The big powers of, mostly western Europe that experienced these industrial revolutions, scramble for the division of Africa and Asia into their colonies.

According to Easterly, William (2009), “surplus capital was often more profitably invested overseas, where cheap materials, limited competition, and abundant raw materials made a greater premium possible.”

Also, see what Moris in his book tittled History Of Colonization (1904) said to give credence to Ayadesian Argument against Smith’s submission. According to Moris (1904), “For Great Britain, the period of the enormous expansion of colonial conquests was between 1860 and 1880, and it was also very considerable in the last twenty years of the nineteenth century. For France and Germany this period falls precisely in these twenty years. We saw above that the development of premonopoly capitalism, of capitalism in which free competition was predominant, reached its limit in the 1860s and 1870s. We now see that it is precisely after that period that the tremendous “boom” in colonial conquests begins, and that the struggle for the territorial division of the world becomes extraordinarily sharp. It is beyond doubt, therefore, that capitalism’s transition to the stage of monopoly capitalism, to finance capital, is connected.”

Since bourgeois aristocracies became So powerful such that they could even determine strategic outcomes, they manipulated their metropolitan authorities into policies of imperialistic expansions and with their multinational giant conglomerates, they penetrated external economies as “Trojan Horses” all because they needed external free environments or markets to help flush their oversaturated economies of excess capital in the name of external investments.

And even now that political independence has been negotiated for all previous colonial territories, the vestiges of imperialism is still lurking, as they are covate manipulations of these frontier nations through the capital venture schemes from these advanced nations. With the capital venture, excess capitals are still being sent as long term loans to peripheral nations, usually, to former colonial territories. With these capital venture schemes, powerful countries are still recolonizing the world by keeping them in perpetual state of indebtedness through sovereign guarantees.

So, at the end, through colonialism, innocent territories were plunged into the same slavery the world had preached against for a no fault of theirs. Also, the prescribed or proposed automatic price and distribution mechanism by Adam Smith kept the involvement of institutions at bay and these uninterrupted market forces have, on numerous occasions, produced unintended results with unsolicited consequences which has, today, made economic depression or recession, a recurring phenomenon.

Therefore, the submissions of the Ayadesian Intellectual Community against Smith’s theory is that the automatic pricing and distribution mechanism controlling the market without government’s regulation and control has left the world with the bitter gifts of Colonialism and recurring recession which remain the darkest chapters in world’s development history.

Next, we shall present a summary of Ayadesian Argument with the Keynesian theory, to be followed by how the conceptual divide will be bridged. This will reveal the structural harmony that the Ayadesian intellectual community is currently advancing.

Eval Asikong is S.A. to the Governor on Social Media, expert in Research and Statistics and a member of Ayadesian Intellectual Community.

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