Intentions Don't Guarantee Outcomes

According to the great Pete Boettke, it is an (intellectually) "immature mode of reasoning" to explain social outcomes by appealing to "bad people doing bad things, and good people doing good things."

That's not economics. It's not even analysis at all.

The more mature style of reasoning, says Boettke, is the "invisible hand explanation."

Boettke:

• ...this mode of analysis commences with a focus on purposive human actors, but then places those actors within specified institutional filters.  The social scientist then examines the “mechanism” in operation in these alternative institutional filters through a study of the structure of incentives and the flow of information they generate. In a market society, for example, property, prices and profit and loss work in concert with one another to produce the positive and negative feedbacks that result in a continuous stream of new and fresh knowledge that individuals discover, utilize and learn from in coordinating their plans with one another through time. The influence these economics forces at work impose of the relevant human actors produces systematic tendencies that either prod and guide actors to pursue productive specialization and realize peaceful social cooperation through exchange, or, in the absence or attenuation of the institutions of property, prices and profit and loss, toward the misallocation of scarce resources and missed opportunities for mutual gains from trade, and ignorance of least cost technologies in production.

Or, the road to hell is paved with good intentions and economic impact studies.

In this old lecture, I try my hand at invisible hand explanations. Let me know what you think!