QUOTE(Angela Kennedy @ Mon 2nd March 2009, 3:11am)
May I add Michael Jacobs' "invisible elbow" to the mix here? (from The Green Economy, 1991) where Jacobs uses the metaphor as a counterpoint to Smith's invisible hand, in order to explain the hidden externalities (costs) to others of certain economic actions (e.g. environmental costs in Jacobs discussion). There could be many others of course.
I haven't read that, but will definitely
look it up.
When I first read your comment, I got a mental image of the Butter on the Fingers being due to the spreading of the Grease on the Elbow, and then I had to wonder whose Palm is getting Larded in the Process — but I think we all know the answer to that.
Anyway, let me pick a random reading that looks apt — here's an excerpt from a pre-publication prospectus by Jacobs himself:
QUOTE
The invisible elbowSometimes these external costs are paid in money. The West German timber industry loses around $800 million each year from the effects of acid rain. And agriculture pays further costs of $600 million in the loss of soil fertility which is also the fault of acid rain? But often the costs are not quantifiable. How do you measure the cost of brain damage to a child? And what price do you place on the species made extinct in the rainforest?
Nearly all environmental problems are 'externalities'. If consumers had to suffer all the pollution caused by the products they bought, they wouldn't buy them in such damaging quantities. It is precisely because costs are passed on to third parties that we let them occur. Environmental degradation is a genuine case of passing the muck.
There is an exception — the contamination of food and water by chemicals is an externality. If you buy a fruit or vegetable coated with pesticide residues then you are the person being poisoned. You are paying the cost of the pollution yourself — although lots of other people may pay too, such as the workers spraying the pesticides and future generations whose water is polluted. This is why there has been such a boom in organic foods and mineral waters. Consumers may not care what happens to others but they are certainly worried about the costs they pay themselves.
But all the other environmental problems affect people too indirectly to make them act. How many people will voluntarily give up driving cars to prevent acid rain or global warming? If I act alone it won't have any significant effect on the problem. So if I don't know that you will co-operate with me, why should I lose out by cutting down on my consumption?
Because only co-operative action can tackle environmental problems, they will not be resolved by unhampered market forces. Indeed, it is precisely market forces which bring them about. Environmental problems occur through the combination of millions of individual economic decisions. These decisions are taken privately, without reference to what everyone else is doing, because nobody can know what everyone else is doing. Added together, market forces generate an overall result which no-one can predict.
This is the 'invisible hand' which the economist Adam Smith argued brought general prosperity. But it can equally be an 'invisible elbow' which brings the earth's precarious ecological balance crashing down like a pile of cans in a supermarket.
Bronzed, rich and dyingTo protect the environment we must force consumers and producers to make decisions which take wider interests into account. We need to 'internalize the externalities' — to bring all the costs back into the box so that the consumer pays the full price. Market forces have to be controlled and there are two main mechanisms for doing it.
— Michael Jacobs (1990), "
The Price of the Future",
New Internationalist, Nº 203, January 1990.
Worshippers Of The Unseen Butterfingers (WOTUB), Critical Reflection ⇒ Making The Invisible Hand Visible
Jon Awbrey Worshippers Of The Unseen Butterfingers (WOTUB) 
