TY  - JOUR
AU  - Stiglitz,Joseph E.
TI  - The Invisible Hand and Modern Welfare Economics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3641
PY  - 1991
Y2  - March 1991
UR  - http://www.nber.org/papers/w3641
L1  - http://www.nber.org/papers/w3641.pdf
N1  - Author contact info:
Joseph E. Stiglitz
Uris Hall, Columbia University
3022 Broadway, Room 212
New York, NY  10027
Tel: 212/854-0671
Fax: 212/662-8474
E-Mail: jes322@columbia.edu
AB  - This paper reviews and puts into perspective recent work reassessing the first and second Fundamental Theorems of Welfare Economics. It assesses the implications of the Greenwald-Stiglitz theorem establishing the (constrained) Pareto inefficiency of market economies with imperfect information and incomplete markets as well as recent work on endogenous technological change. The information theoretic limitations to the Second Fundamental Theorem are also discussed, including the inability to separate out issues of equity and efficiency. The final sections of the paper consider the consequences of these problems for economic organization, economic policy, and the role of ideology in the belief in the Invisible Hand.
ER  -