Adam Smith discusses market self-regulation in the following way: “Each individual, while pursuing his own interest, frequently promotes that of society more effectively than when he really intends to promote it. I believe he is led by an invisible hand”.
Edinburgh, 9 March 1776
Adam Smith publishes An Inquiry into the Nature and Causes of the Wealth of Nations, known in Spanish as La riqueza de las naciones. In what many consider to be the foundational basis of economic liberalism theory, Smith speaks about market self-regulation in the following way:
“Each individual, while pursuing his own interest, frequently promotes that of society more effectively than when he really intends to promote it. I believe he is led by an invisible hand.”
On free competition:
“People of the same trade seldom meet together, even for diversion and recreation, without the conversation ending in a conspiracy against the public or some contrivance to raise prices.”
Thus, the Scotsman trusts that markets will self-regulate by an invisible hand and that there will be healthy and free competition that will benefit companies, consumers, and society in general.
Geneva, 15 January 1925
The agreement of one of the most famous industrial cartels in history is signed. At the table sit the leading manufacturers of light bulbs in the world.
Osram – Germany
Philips – Netherlands
Compagnie des Lampes – France
Associated Electrical Industries (AEI / Mazda) – United Kingdom
General Electric – United States
Tokyo Electric Company – Japan
Tung-Sol – United States
Swiss Electric Lamp Manufacturers (CGE) – Switzerland
Società Edison – Italy
Representatives of the different companies sign a document stipulating that the lifespan of light bulbs could not exceed 1,000 hours of use; it also details the market shares that each company must have and the prices to be set for the product in each country. A company based in Switzerland (Phoebus S.A.) would oversee compliance with the terms of the contract and impose penalties on companies that do not comply with any of the clauses. Any innovation in the field of light bulbs must be approved by the cartel’s board of directors.
It is clear that Adam Smith was mistaken. Capitalism does not tend towards a free market, but rather towards business concentration and oligopoly or directly to monopoly. Why would companies harm each other by competing when they can agree among themselves to guarantee their profits?
Calle de San Jerónimo, Madrid, 9 January 2018
Rodrigo Rato appears before the Congress of Deputies as part of the Investigation Commission into the financial crisis. In a testimony lasting more than five hours, the man once considered the father of the Spanish economic miracle, a symbol of the economic management of the Popular Party, Minister of Economics and Finance, Managing Director of the International Monetary Fund, and President of Bankia deflects responsibility while distributing criticism against various institutions and individuals involved in the Spanish banking crisis.
Rato’s audacity reaches its peak when one of the deputies asks him about the losses suffered by clients and shareholders of Bankia during his management and his responsibility as president of the entity during the financial crisis. The once economic guru of the PP responds with an emblematic phrase: “It’s the market, my friend!”
Thus, a supposed genius of economics has nothing more to say about it. It’s the market, it’s the invisible hand that dictates the dynamics of financial markets, and there are no responsible parties, just the market, my friend! From his ivory tower, Rato trivialises the crisis of an entity that he himself presided over and shows no ability to accept even a minimum of self-criticism in his management.
It seems that Rato has the definitive answer for any situation: a perfect neoliberal axiom for every scenario.
If you have been on the waiting list for an operation for months and cannot afford private health insurance: it’s the market, my friend.
If you have a dependent relative, the State does not help you, and you have no resources to care for them: it’s the market, my friend.
If no one is researching a cure for a rare disease: it’s the market.
Just as in the Middle Ages, misfortunes were attributed to the will of the gods, there is now a new God who decides what will become of us. Any misfortune is inevitable if that is what God Market decides.
Gran Canaria, 15 August 2025
Rodrigo Rato has demonstrated his great expertise in economic management, but not for the benefit of Spain, the IMF, or Bankia, but for himself, amassing an estimated fortune of around €27 million. Not bad for someone who earned less than €70,000 as a minister. To accumulate such a sum, Rato had to commit crimes such as tax fraud, money laundering, and corruption among individuals. But well, it is known, it’s the market, isn’t it? What can we do?
I would like to reflect on the existence or lack of a truly free market in our country: In the generation and marketing of electricity, three large companies control virtually the entire market. The same number is repeated in the supply of fuels and natural gas. Telecommunications are controlled by four major companies. In banking, the vast majority of deposits, loans, and branches are concentrated in just three entities. The internal maritime transport pie is mainly divided among two companies. The large food distribution is clearly dominated by three multinationals. The vast majority of advertising investment and television audience is focused on two major media groups.
It seems that the grounds are fertile for many Phoebus S.A.s to exist, for many meetings where decisions are made from the reserves of a restaurant regarding the fate of consumers, the prices of products or services, market shares, mergers, and mass layoffs… Or perhaps I have a crisis of faith and should believe in the dictates of the great God Market.
