"The Invisible Hand is a Closed Fist"

In chapter three of McNally’s writing “The Invisible Hand is a Closed Fist” in Another World is Possible it discusses the importance of the invisible hand of the market. The founder of liberal economics named Adam Smith focused on the idea of capitalism which was seen as an ideology where free trade is an important aspect to human nature.

For instance, non-governmental organizations (NGOSs) and social-demographic groups believed that capitalism could function fairly by “replacing the free trade agenda with fair trade policies” without social inequalities, environmental degradation or growing disparities between nations (McNally, 2006). As a result, capitalism allowed for fair trade between commodities like coffee and tea but not steel, oil, tool, and dye machines (McNally, 2006).

However, from the liberal point of view, the idea of free trade being fair in a capitalist society had been false. Yet, Karl Polanyi who is an economic anthropologist and historian states how market exchanges have usually been “accessories” to economic life (McNally, 2006). He used his idea of reciprocity and redistribution to maximize individual accumulation and to ensure the well-being of all through cultures of sharing.

For instance, the chapter states that in Canada “governments outlawed the potlach ceremonies in which native peoples would redistribute goods to those in need” (McNally, 2006). This concept of fair governance was not distributed as it created more people to suffer through inequality and class warfare due to the government’s corruption of trade. Instead, fair trade challenges the imperatives of capitalism through accumulation, competition, and profit maximization in the market. Fair trade generally is downplayed by capitalist imperatives since the market tries to find ways to take advantage of people. The market tends to focus less on production and more on exchanges. For instance when taking a look at exploitation, it is seen as a distortion of the market and not as a capitalist imperative. Therefore, the goal of fair trade is to do trade in terms of value which will reward everyone in society such as both the rich and poor. Where in reality, this is not necessarily true.

The author also discusses Karl Marx’s theory of alienation to expand on labour power in the capitalist society. He did this by comparing historical to modern exploitation of the poor in global agriculture. For instance, coffee had been an agricultural commodity from bananas to coco (McNally, 2006). But when prices collapsed, poor farmers resulted in debt where they were forced to sell their land to rich farmers. In Britain, landless peasants had to move onto the labour market to earn wage where land ownership became concentrated into fewer hands and capitalist employers had to find more poor people that were desperate to work at any wage (McNally, 2006). This is seen in the South where “rich capitalist farmers export a larger share of what they produce (since poor farmers directly consume much of their produce) and generate more foreign currency” (McNally, 2006).

Therefore, in order to keep up with the high demand, farmers had to sell their goods at lower prices. During the Great Revolution of the 1960s in India, agriculture became more chemical-intensive in farming. Since the costs of pesticides and chemical fertilizers had risen, peasants were in debt causing “47 percent of Indian girls and boys under the age of four and 48. 5 percent of adult to be malnourished” (McNally, 2006). However, this issue of rise in cost, decline in price, land being taken by capitalist, and danger in the environment continued to accelerate further to the proletarian peasants of the rural poor and indigenous peoples. This separation of producers being forced off their land and put into cities became important to capitalist. Marx described this as the “process of dispossessing peasants and creating a wage-labouring class” (McNally, 2006).

In other words, this process became the commodification of human labour, also known as globalization (McNally, 2006). Lastly, there had been an unequal relation of exchange between those that are property owners and those who are property less such as the proletarians. McNally states how there were “an increase from 1. 9 billion in 1980 to nearly 3 billion by 1995 of peasants being pushed off their lands” (McNally, 2006). This caused an increase opportunity for exploitation of labour in businesses. However, neo-liberalist ended up going against wages, job security, and union rights of workers around the world (McNally, 2006). For instance, workers in the unions fell from 25 percent in the United States, 21-10 percent in France, and 50-10 percent in Spain (McNally, 2006). There were also brutal and devastating wars against workers in Latin America. By 1996, “30 percent workers in Chile, 36 percent of workers in Argentina, 39 percent of workers in Columbia, and 41 percent of workers in Peru” were seen to have no contracts (McNally, 2006). As a result, the level of income in Latin America had fallen, increasing the number of people living in poverty.