Visible and Invisible Hands at ‘Colors of India’ Fest
This caselet introduces an important economic concept of ‘circular flow of economy’ through the developments at ‘Colors of India’ – the college fest at Bangalore School of Management (BSM). The theme of ‘Colors of India – 2014’ was women social entrepreneurs who were invited to put their stalls at BSM at subsidized rates. However, at the end of day-1 of the cultural fest, the women social entrepreneurs were quite disappointed as none of them could earn good revenues from the event. The women became hopeful when the faculty and the student coordinators reassured them of good business in the ensuing two days. However, why was it so important for the women social entrepreneurs to do good business at the college fest? How would it impact the associated consumers and other businesses? In answering these questions, the caselet helps understand the constituents of the circular flow of economy, the factors affecting it and its significance. It also throws some light on the concepts of visible and invisible hands.
Prerequisite Conceptual Understanding
- • Paul A. Samuelson, et al., “The Modern Mixed Economy”, Economics, 19th Edition, McGraw Hill Education (India) Private Limited, 2010 – To have an understanding on the functioning of a modern mixed economy
- • Axis Bank, “Axis Bank – Badhti ka naam zindagi... 2013”, https://www.youtube.com/watch?v=c25Qv7Ez8nU, (accessed date: August 6th 2015) – To visually understand the circular flow of economy
Before the Classroom Discussion
- • Adam Smith, The Wealth of Nations, Thrifty Books, October 27th 2009 – It was suggested that students should refer to the book by Adam Smith, who is considered as the ‘Father of Modern Economics’, not so much to read the entire book but to lay their hands on this magnum opus – the faculty can refer to pages xvi, xxiii and 572, where the concept of invisible hand was propounded.
Case Positioning and Setting
This caselet can be used for:
- • MBA Program in Managerial Economics course – To understand the concept of circular flow of economy, its constituents and the various factors that affect it
- • International Business Module – To understand the concept of circular flow of economy amidst globalization
- I. Given the predicament of women entrepreneurs at the end of ‘day-1’ of the cultural fest at BSM, discuss the significance and operation of circular flow of a modern mixed economy.
- II. Explain the working of Adam Smith’s doctrine of ‘the invisible hand’ in the case of women entrepreneurs at the culture fest at BSM.
- III. .....................
Suggested Reading for the Faculty
- • Michael G. Rukstad, “Economics: An Introduction and Vocabulary”, Harvard Business School, June 18th 1993
Preamble to this Caselet Analysis
This caselet introduces some of the central economic concepts – circular flow of economy, invisible hand, role of trade, globalization and money – specialization and division of labor – to the participants through the cultural fest at BSM. While the caselet facts recount the first day’s happenings, a careful analysis of these would help connect the dots between case facts and some of the central economic concepts mentioned above. Accordingly, this caselet was orchestrated in the following way [Exhibit (TN)-I]...................