What to Do When the Invisible Hand Stops Working

June 6 (Bloomberg) -- Economists rave about the power ofthe market to deploy productive resources better than anycentral planner possibly could. A mysterious process, which AdamSmith called the “invisible hand,” guides countless individualswith conflicting aims to somehow coordinate into a remarkablyeffective economic organization. Usually.

But as the British economist John Maynard Keynes famouslyargued, markets can also fall into dysfunction. A crisis can setoff a downward spiral: Spending declines, companies fail, peoplelose jobs, spending declines further. Much of the wonderfulcoordination disappears, as if the invisible hand were injured.