A Little Tale of Sunday Shopping
I was reading through this week’s Blog articles and, of course, re-read the one’s I wrote on the invisible hand, a recurrent topic on Lost Legacy because of the widespread misattribution of its meaning from its use as a single metaphor in “Wealth of Nations” which has become an iconic (even ironic) word for what Adam Smith wrote about.
I went out to get some tomatoes from a nearby village shop, because I am still deep in rural France for a few more weeks and tomatoes are part of my wife’s recipe for Penne Bolognaise; she went back to Edinburgh a couple of day’s ago on family business, but the certain knowledge that my version of her recipe would not be as good as the original is by no means the only reason that I am, as Californians say, ‘missing her already’.
While driving (its 5 km away) I thought about the invisible hand some more. Without knowing for certain, I knew the shop would have lots of tomatoes to choose from, and that set a train of thoughts about markets (I avoid using “THE Market”, on the grounds there isn’t one in any meaningful sense of the phenomenon, though called such by many people).
Smith said we all seek to better ourselves, which some have interpreted to mean we all seek after greater wealth. He meant much more than wealth as an example of his meaning. We have this determination to better ourselves from birth to the grave (what is a baby’s cry but a call to be made dry and be fed?). Some even believe that they are going to a ‘better place’ after death called ‘Heaven’ (and some of these, uncharitably, believe their neighbours – in the Biblical sense – deserve to go to a worse place called Hell).
Examples of Smith’s desire to better ourselves includes shifting our sitting, lying or standing position to become more comfortable; when we sit in a draught we close the window; when the sun is our eyes we put on shades; when it’s raining we seek shelter; when we are hungry we look for food, and so on.
Now the important point to note is that we are not ‘led by an invisible hand’ to do any of these things. The cause of each of them – and the millions of other instances – is well known. It does not need mysterious invisible hands, nor miracles or anything like them. The same goes for what happens in what we call markets, the phenomena of which are well understood. People act to better themselves, however they define betterment in this context. People sell items because they anticipate that people, somewhere, will be willing to pay for them to better themselves compared to what they would be in the absence of a chance to buy, assuming the price is within their range compared to what else they could do with their money (and how much they have got left).
Smith understood the elementary factors involved in markets (“Wealth of Nations” Book I). Nobody has the tell the local SPAR shop to stock tomatoes this morning (Sunday); nobody had to tell the local farmers to plant, groom, feed and harvest tomatoes this summer; it happened because everybody in the chains of supply of tomatoes, and all the other things sold in the shop, independently sees opportunities to better themselves compared to the situation they would be in if they didn’t.
If their expectations are correct they succeed in their quest – if we shut the window that is causing the draught, we are more comfortable; if the draught is coming under the door we will not help ourselves by shutting the window or turning the tv on. There is plenty of room for wrong choices – nobody said that everything and anything you do will deliver what you expected; nobody says every one’s a winner, or that society should be so made so as to give you the modicum of happiness and comfort that you believe you deserve. Your only chance (it was never a right to have it done for you, though humanity dictates it should be if you are incapable) is to so adjust your affairs as to improve your lot by your actions being consistent with the anonymous, untold, unplanned and unordered actions of the rest of society’s members, or at least sufficient of them in a chain that links their aspirations for self-betterment with yours.
Again there is no invisible hand at work; it does not exist; it was a playwright’s metaphor (Macbeth, 3:2) picked up by Smith trying to make a point (the only time he used it in "WEalth of Nations") to dramatise the unintentional consequence of people trying to better themselves by reducing the anxiety and insecurity of letting their scarce (and they were very scarce) capitals travel long distances out of sight until sometime much later they might return and make them better off. If they didn’t return they lost everything. The alternative was to keep their scarce capital within sight and near at hand, where they could protect them, watch over them and, hopefully, see them grow day by day if they had made the right choices.
The consequence of these choices, made daily across the land, with no co-ordination (or publicly paid 'co-ordinators’), no imposed ‘strategy’ (or publicly paid ‘strategists’), no grand ‘design’ (or ‘publicly paid designers’), and no invisible ‘hand of Jupiter’, the Roman God (or any other god, for that matter) (Smith’s ‘History of Astronomy’ – written 1744-49, published posthumously 1795).
Markets work because people are made better off by them – they break-out wherever and whenever the State tries to do their job for them, sometimes underground – and people accept them because they work. Much like the evolution of words in language (as Smith wrote about in ‘Consideration Concerning the First Formations of Languages’, first published in 1761, and then in the third edition of “Moral Sentiments” in 1767) both in ancient times and now too; nobody arranges for them, nobody controls them. Words evolve of their own accord; some words and expressions stick; many others appear and disappear. Trying to fix from the centre how a language should be formed is akin to herding cats, as the Acadamie Français demonstrates in its hopeless quest to prevent foreign (mainly English) words and expressions from becoming integrated into the French language. Every road sign in France says ‘STOP’, not ‘Arrette’ (except in that funny place called Quebec), about which I chuckle in tribute to the folly of ‘top people’. Trying to regulate and improve markets is a bad idea, even if it has good intentions behind it.
Lost Legacy’s relentless campaign against the misuse of the invisible hand metaphor is part of the wider campaign to restore Adam Smith’s Lost Legacy and his vision of the benefits of the Fourth Age of Commerce, especially to the poorest in society.
I went out to get some tomatoes from a nearby village shop, because I am still deep in rural France for a few more weeks and tomatoes are part of my wife’s recipe for Penne Bolognaise; she went back to Edinburgh a couple of day’s ago on family business, but the certain knowledge that my version of her recipe would not be as good as the original is by no means the only reason that I am, as Californians say, ‘missing her already’.
While driving (its 5 km away) I thought about the invisible hand some more. Without knowing for certain, I knew the shop would have lots of tomatoes to choose from, and that set a train of thoughts about markets (I avoid using “THE Market”, on the grounds there isn’t one in any meaningful sense of the phenomenon, though called such by many people).
Smith said we all seek to better ourselves, which some have interpreted to mean we all seek after greater wealth. He meant much more than wealth as an example of his meaning. We have this determination to better ourselves from birth to the grave (what is a baby’s cry but a call to be made dry and be fed?). Some even believe that they are going to a ‘better place’ after death called ‘Heaven’ (and some of these, uncharitably, believe their neighbours – in the Biblical sense – deserve to go to a worse place called Hell).
Examples of Smith’s desire to better ourselves includes shifting our sitting, lying or standing position to become more comfortable; when we sit in a draught we close the window; when the sun is our eyes we put on shades; when it’s raining we seek shelter; when we are hungry we look for food, and so on.
Now the important point to note is that we are not ‘led by an invisible hand’ to do any of these things. The cause of each of them – and the millions of other instances – is well known. It does not need mysterious invisible hands, nor miracles or anything like them. The same goes for what happens in what we call markets, the phenomena of which are well understood. People act to better themselves, however they define betterment in this context. People sell items because they anticipate that people, somewhere, will be willing to pay for them to better themselves compared to what they would be in the absence of a chance to buy, assuming the price is within their range compared to what else they could do with their money (and how much they have got left).
Smith understood the elementary factors involved in markets (“Wealth of Nations” Book I). Nobody has the tell the local SPAR shop to stock tomatoes this morning (Sunday); nobody had to tell the local farmers to plant, groom, feed and harvest tomatoes this summer; it happened because everybody in the chains of supply of tomatoes, and all the other things sold in the shop, independently sees opportunities to better themselves compared to the situation they would be in if they didn’t.
If their expectations are correct they succeed in their quest – if we shut the window that is causing the draught, we are more comfortable; if the draught is coming under the door we will not help ourselves by shutting the window or turning the tv on. There is plenty of room for wrong choices – nobody said that everything and anything you do will deliver what you expected; nobody says every one’s a winner, or that society should be so made so as to give you the modicum of happiness and comfort that you believe you deserve. Your only chance (it was never a right to have it done for you, though humanity dictates it should be if you are incapable) is to so adjust your affairs as to improve your lot by your actions being consistent with the anonymous, untold, unplanned and unordered actions of the rest of society’s members, or at least sufficient of them in a chain that links their aspirations for self-betterment with yours.
Again there is no invisible hand at work; it does not exist; it was a playwright’s metaphor (Macbeth, 3:2) picked up by Smith trying to make a point (the only time he used it in "WEalth of Nations") to dramatise the unintentional consequence of people trying to better themselves by reducing the anxiety and insecurity of letting their scarce (and they were very scarce) capitals travel long distances out of sight until sometime much later they might return and make them better off. If they didn’t return they lost everything. The alternative was to keep their scarce capital within sight and near at hand, where they could protect them, watch over them and, hopefully, see them grow day by day if they had made the right choices.
The consequence of these choices, made daily across the land, with no co-ordination (or publicly paid 'co-ordinators’), no imposed ‘strategy’ (or publicly paid ‘strategists’), no grand ‘design’ (or ‘publicly paid designers’), and no invisible ‘hand of Jupiter’, the Roman God (or any other god, for that matter) (Smith’s ‘History of Astronomy’ – written 1744-49, published posthumously 1795).
Markets work because people are made better off by them – they break-out wherever and whenever the State tries to do their job for them, sometimes underground – and people accept them because they work. Much like the evolution of words in language (as Smith wrote about in ‘Consideration Concerning the First Formations of Languages’, first published in 1761, and then in the third edition of “Moral Sentiments” in 1767) both in ancient times and now too; nobody arranges for them, nobody controls them. Words evolve of their own accord; some words and expressions stick; many others appear and disappear. Trying to fix from the centre how a language should be formed is akin to herding cats, as the Acadamie Français demonstrates in its hopeless quest to prevent foreign (mainly English) words and expressions from becoming integrated into the French language. Every road sign in France says ‘STOP’, not ‘Arrette’ (except in that funny place called Quebec), about which I chuckle in tribute to the folly of ‘top people’. Trying to regulate and improve markets is a bad idea, even if it has good intentions behind it.
Lost Legacy’s relentless campaign against the misuse of the invisible hand metaphor is part of the wider campaign to restore Adam Smith’s Lost Legacy and his vision of the benefits of the Fourth Age of Commerce, especially to the poorest in society.
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