Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-first Century [Hardcover]

Deepak Lal (Author)

Book Description

Publication Date: July 3, 2006

Reviving the Invisible Hand is an uncompromising call for a global return to a classical liberal economic order, free of interference from governments and international organizations. Arguing for a revival of the invisible hand of free international trade and global capital, eminent economist Deepak Lal vigorously defends the view that statist attempts to ameliorate the impact of markets threaten global economic progress and stability. And in an unusual move, he not only defends globalization economically, but also answers the cultural and moral objections of antiglobalizers.

Taking a broad cross-cultural and interdisciplinary approach, Lal argues that there are two groups opposed to globalization: cultural nationalists who oppose not capitalism but Westernization, and "new dirigistes" who oppose not Westernization but capitalism. In response, Lal contends that capitalism doesn't have to lead to Westernization, as the examples of Japan, China, and India show, and that "new dirigiste" complaints have more to do with the demoralization of their societies than with the capitalist instruments of prosperity.

Lal bases his case on a historical account of the rise of capitalism and globalization in the first two liberal international economic orders: the nineteenth-century British, and the post-World War II American.

Arguing that the "new dirigisme" is the thin edge of a wedge that could return the world to excessive economic intervention by states and international organizations, Lal does not shrink from controversial stands such as advocating the abolishment of these organizations and defending the existence of child labor in the Third World.

Editorial Reviews

Review

Deepak Lal has provided us with a stirring, even vehement, argument for the restoration of classical liberalism.
(Tim Worstall Daily Telegraph )

If Deepak Lal did not exist, I have no doubt it would be necessary to invent him. A highly accomplished technical economist with an excellent reputation, Lal is also the most formidable and forthright champion of classical liberal economic thinking.
(David Smith World Business )

Deepak Lal's book reviews modern development economics from a free market perspective. . . . Mr. Lal demonstrates that in spite of the defeat of communism, many Western special interests still introduce rheumatism into the invisible hand of the free market.
(Martin Hutchinson Washington Times )

Deepak Lal gives us a fiery refresher course not just in the virtues of the free market, but on the classical liberal outlook on life.
(George Walden Sunday Telegraph )

Lal covers an immense amount of ground, from the theory of international trade to the differences between Michael Oakeshott's conservative opposition to the 'enterprise state' and that of the classical liberal Friedrich Hayek.
(Samuel Brittan Financial Times )

Deepak Lal effectively points out that just about every goal held dear by those who call themselves radicals and progressives is best reached by exactly the opposite policy prescriptions that they put forward. Indeed, we can go further and point out that the best methods of reaching those goals are in fact the truly liberal ones, those laid out all those decades ago by Adam Smith, David Hume and David Ricardo. . . . [T]his book can and should be a rallying point for those of us who are indeed liberal, radical and progressive.
(Tim Worstall Technology Commerce Society Daily )

This book gives a coherent and lucid account of classical liberal theory and argues a case for reviving the invisible hand. Lal's stands on 'trickle down' effect, relevance of the IMF, World Bank and the WTO, genetically modified food and government interventions to achieve equity are contentious. I hope this book generates informed public debates on these issues.
(U. Sankar The Hindu )

An erudite and spirited defense of the only approach to public policy that has brought mankind sustained economic growth, widespread alleviation of poverty, and embedded respect for the worth and dignity of the individual.
(Economic Affairs )

A wide ranging and spirited defense of classical liberalism as an organizing principle for the economic affairs of the world.... Provides a nice blend of personal anecdote, literature review, economic argumentation, and broad empirical evidence.
(Douglas Irwin Journal of Economic Literature )

Deepak Lal's Reviving the Invisible Hand, an uncompromising and insightful defense of the classical-liberal case for laissez-faire capitalism and free trade that should be on every liberal's shelf. It begins with a brief history of capitalism, explains its fundamental principles, examines the threats it faces, and proposes ways in which the threats may be met intellectually and politically. Capitalism's great enemy, socialism, is thought by many to be dead, but as Lal shows, dirigisme is alive and well. The book is crammed with facts, broad-brush accounts, nuanced technical arguments, brutal critiques, and bold prophecies. Themes are interwoven and repeated. The author apparently aimed to stamp out every misconception about capitalism . . . in a single book. This . . . offers the reader an encyclopedic amount of material within a medium size volume.
(Suri Ratnapala Independent Institute )

Review

What would Adam Smith and David Hume have had to say about globalization, human rights, outsourcing and free trade, capital controls, the WTO, the IMF and the World Bank, Islamic fundamentalism, the rise of China and India, the environment, the welfare state, U.S. foreign policy, and every other major issue if they were alive today? The closest you can ever come to finding out is to read this brilliant and provocative book by the last, but by no means the least, of the classical liberals, Deepak Lal.
(Ronald E. Findlay, Columbia University )

See all Editorial Reviews

Product Details

• Hardcover: 336 pages
• Publisher: Princeton University Press (July 3, 2006)
• Language: English
• ISBN-10: 0691125910
• ISBN-13: 978-0691125916
• Product Dimensions: 9.2 x 6.3 x 1.1 inches
• Shipping Weight: 1.3 pounds
• Average Customer Review: 2.8 out of 5 stars  See all reviews (6 customer reviews)
• Amazon Best Sellers Rank: #2,039,581 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

21 of 25 people found the following review helpful:

5.0 out of 5 stars Interesting Work, Useful Historical Analysis, August 28, 2006

By 

Mark Brittingham (Califon, NJ United States) - See all my reviews
(REAL NAME)   

This review is from: Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-first Century (Hardcover)

Mr. Lal explores the historical and moral roots of Capitalism with an especially acute eye toward the role of globalization in helping to drive the expansion of wealth in modern liberal economies. He is particularly careful about tracing the political and intellectual drivers behind open trading systems as well as the criticisms that developed in response.

Mr. Lal has a keen sense of irony and the unexpected. For example, he shows how the justifications for liberalizing trade in 19th Century England had far less to do with enhancing individual wealth or welfare and more to do with the government's hope that this would enhance its own revenues by giving it a bigger horse to ride. The irony of the fact that globalization led to explosive improvements in personal wealth and welfare is not lost on Mr. Lal either. He explores similar interesting and unexpected outcomes in the areas of labor law, trade protectionism, attempts to liberalize trade (e.g. WTO), and the global financial infrastructure. As the book progresses, he attempts to deal with the entire panoply of criticisms of modern economic liberalism including discussions of poverty and income inequality, labor law and foreign labor, 'sustainable development' and anti-corporatism.

Mr. Lal is a proponent of trade liberalization as he sees in it the seeds of both national and individual economic growth. He is, correspondingly, critical of the rise of reactionary anti-globalists and he marshalls copious evidence that such anti-globalist impulses undercut both wealth creation and international cooperation. For example, few people realize the extent to which the early 20th century backlash against globalization (i.e. the anarchists) led to the first World War. The worry, of course, is that a similar backlash - a toxic brew of Islamic anti-liberal and Western anti-globalization forces - could lead to more conflict in the future (the latter not being a theme of the book but a concern touched upon in the last chapter).

In attempting to cover such a broad range of topics, the analysis is sometimes a bit fragmented or simplistic as "Dr. Steppy" observed. But I disagree with the conclusion that this is endemic to the book at all - it simply isn't true. Indeed, the example put forth by "Dr. Steppy" (the historical development of individualism) is such a tertiary point in the overall theme of the chapter on Morality and Capitalism that it would be a mistake for Mr. Lal to have developed it any further. My sense is that this critique has more to do with Dr. Steppy's political persuasion than with the merits of the work under consideration.

Dr. Lal's writing is straightforward and, while careful and somewhat academic in tone, very accessible to anyone with an interest in the topic and a modicum of intellectual ability. I would recommend it along with Benjamin Friedman's somewhat more challenging work entitled "The Moral Consequences of Economic Growth."

12 of 17 people found the following review helpful:

2.0 out of 5 stars Useful read and core concepts sound but..., September 1, 2006

By 

R. Linturi (Helsinki) - See all my reviews

This review is from: Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-first Century (Hardcover)

I found the book useful. Deepak Lal gives very good examples to support further liberalisation of trade. The historical analysis contains also a number of interesting points. However a few pages here and there are not well written and you need to read them several times to grasp the meaning. Also especially towards the end of the book it seems that the author has his own political agenda, which is not fully supported by his theory. Also his handling of how we should address the question of limited resources when there is a possibility of a problem of commons seems to be totally inadequate. There are cases where we do benefit from global regulations above those that Lal mentions. Totally dismissing the problem of climate change as harmless and giving the impression that DDT (and I guess other poisonous chemicals as well are implied) should be allowed are very weakly handled and if they should be taken as serious comments, there should have been other opposite examples. In the real world there certainly are things like the ozone layer that we need to take care of jointly. I also would have appreciated some theoretical handling of only reaching the local optima through independent agents in a free market that John Nash pointed out in his research. I hope liberal thinking could have more balanced supporters. This sort of omissions and misleading bylines lessen the case severely. And if these issues really create a problem to the theory, then the theory should be corrected. This requires a more balanced and scientific approach with best examples and arguments from all sides and not this kind of polemical approach. However, I did learn quite much and it is not uncommon in policy kind of books that the analysis part is good and the recommendations follow party lines and arguments are poor.

8 of 12 people found the following review helpful:

5.0 out of 5 stars Sweeping case for Liberalism, September 4, 2006

By 

Johnny & Riza "musician married craftperson" (Lafayette. Colorado) - See all my reviews

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This review is from: Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-first Century (Hardcover)

Lal applies the concepts of Classical Liberalism across historical and cultural boundaries, applying its premises to trade, capital flows, monetary policy and morality. He is certainly an advocate of classical liberalism, but his propositions are presented academically and are backed up with facts and substantive research.

The book can be dry and academic at times, but it remains an interesting and thoughtful read.