If Smith’s use of an invisible hand is a trivial metaphor in Wealth of Nations, what about his use of it in TMS?
As I am temporally separated from my library, my Moral Sentiments was published in 1869 and is not the Liberty Fund edition which I normally use. Interestingly, this copy was awarded as ‘Queen’s Prize’ to a Frederick W. Gooch by the ‘Science and Art Department’ of the ‘Committee of Council of Education’ for his science classes in May 1872 by the ‘Lords of the Committee of Privy Council on Education (MDCCCLXI). Quite a mouthful! I also had to uncut all pages in it, showing that Mr Gooch never read any part of his prize!
The reference to ‘an invisible hand’ appears in ‘Part fourth: of the effect of utility upon the sentiment of approbation’, Chapter 1: Of the Beauty which the Appearance of Utility bestows upon all the Productions of Art, and the extensive Influence of this Species of Beauty’. You should be able to trace the relevant chapter with this archaic reference in a modern copy.
Smith establishes that utility is a principal source of beauty, in the form of a ‘coveniency’, or some kind of fitness for purpose, but more than that, whatever the item is, if it looks good to the eye, it has beauty, and he quotes either Francis Hutcheson or David Hume to the effect that the utility of an object suggests the pleasure or conveniency for which it is ‘fitted’ (designed?) to promote. And this feature motivates persons without these objects to strive to acquire them by commencing the process by which they better themselves (a theme taken up in Wealth of Nations), and, interestingly, that some people, in the extreme, lay out money, even at the risk of ruin, to acquire ‘trinkets of frivolous utility’. Conduct is influenced by this principle – the lust for objects, and not ‘an invisible hand’ – and it is ‘often the secret motive of the most serious and important pursuits of both private and public life.’
He gives an extended, brilliant, and oft-quoted example, of the ‘poor man’s son, whom heaven in its anger has visited with ambition.’ From it he generalises that it is well that nature imposes upon us this deception in this manner, because that principle – imagining how we can be better off by changing our circumstances, not an invisible hand – first prompted humans to cultivate the ground, build decent and magnificent houses, found cities and large societies, invent and improve through science and the arts (manufactures) to ennoble and embellish human life, and spread the modern (18th century) civilisation across the globe.
His argument shifts now to separate these motivations from a concern for humanity towards mankind and from the baser kind, summarised as a survey of his possessions, and he declares and demonstrates firmly that motives of humanity are absent predominantly compared to our baser motives. Now it is at this juncture that he introduces his sole use of the metaphor of ‘an invisible hand’ by the ‘proud and unfeeling landlord’. As with his use of the same metaphor in Wealth of Nations, his use of it in Moral Sentiments had nothing to do with markets, or theories of markets, or supernatural religion. It was entirely about the unintentional consequences of human motivations, even of those involving bad conduct.
The landlord lives off his rents, but cannot consume much more food than one of his tenants because their stomach sizes, presumably within a range of anorexic to obese, are similar. He can have his food in his palace prepared more delicately, served more politely, and his table dressed more ostentatiously than poor men eating in their hovels. But, says Smith, his ostentatious living is supplied by those who prepare the products that he consumes, fit his dwelling with furniture and equipage, and provide him with his ‘luxury and caprice’, and these suppliers acquire payment in return for so doing, but not from his ‘humanity or his justice’. This has the consequence that the unfeeling landlord in his vanities ‘nearly’ maintains the number of inhabitants which his ‘soil’ is capable of maintaining.
Smith goes further. He asserts that the rich, despite their ‘natural selfishness and rapacity’, though they consume little more than the poor, and though they intend only their ‘own conveniency’, and though their sole end from employing the labours of the ‘thousands they employ’ directly and indirectly is vanity, etc., they necessarily divide with the poor the produce of their improvements.
The rich, says Smith, are ‘led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made had the earth been divided into equal portions among all its inhabitants; and thus without intending it, without knowing it, advance the interests of society, and afford means to the multiplication of the species.’
With the discovery of property after the ‘rude society’ of hunters (and gatherers), the eventual resultant increase in food production, through shepherding and farming, rose sufficiently to enable population to grow. There could have been no lasting increase in population without property because there would have been no basis for sustaining rising populations from the output of ‘rude society’. With property and all that followed, population rose above the levels achieved in rude society and above that which would have been sustainable if the land had been divided equally. The ‘richer’ property owners unintentionally maintained a larger population.
Smith is close to saying that many forms of economic organisation, and various forms of political control that might be considered to be less than palatable (however defined), could have ‘incidental beneficial effects’, as some put it, and I think this is probably true, though he did not spell it out specifically. If property owners were part of a ‘providence’ that divined the division of the earth, whatever that means, he asserts that providence ‘neither forgot nor abandoned those who seem to have been left out in the partition’, because they too ‘enjoy their shares of all that it produces’. This may be comforting, but hardly historical.
If a population lives on a total food output of X and doubles in number, it must consume a total food output of 2X to maintain the same reproduction rate. Any replacement mode of production from rude to landed property must maintain its food production, and thereby its consumption per head, commensurate with levels reached before. If it does better than that, there is room for property owners to raise their consumption per head of whatever they can exchange for their surplus food, and, if Smith’s assertion is to remain true, for non-property owners to raise their per capita consumption too, or to be at least as well off as before. The greater is food production after changes in modes pf production, the higher the reproduction and survival rates of people and the more sustainable is population growth.
The fact that the discovery of modes of production based on property (from shepherding, farming to commerce) have increased productivity through each mode, it is perfectly possible for a population of propertyless persons to subsist sufficiently well to reproduce itself, and to grow slowly, provided they can access shares in output from exchange relationships with the property owners. This is not a result of ‘an invisible hand’; it is a necessary outcome of the division of annual product among claimants of shares on it, above or close to subsistence, based on the propensity to exchange and the division of labour.
Again, the metaphor of ‘an invisible hand’ guiding this outcome is quite redundant and expresses nothing more than laws of arithmetic, including addition and compound interest.
Smith asserted that we are part of the process that brings these outcomes about. We are ‘charmed’ with the ‘beauty’ of society’s ‘arrangements’ which are ‘fitted to promote it’ and they ‘confound’ our imagination ‘with the order, the regular and harmonious movement of the system, the machine or economy’, so to speak, as ‘something grand, and beautiful, and noble’, well worth ‘all the toil and anxiety’ we ‘bestow upon it.’
It is after this, that Smith asserts that the ‘same principle, the same love of system, the same regard to the beauty of order, or art and contrivance’ frequently serves to recommend these institutions which tend to promote the public welfare.’ He develops this theme in praise of ‘public-spirited’ people who encourage ‘improvements’ to whatever exists that hinders ‘public welfare’ – he mentions in this context road repairs, struggling manufactures like linen and woollen goods – and notes crucially that their motives may not be based on ‘sympathy’ and ‘fellow feeling’ for ‘waggoners and carriers’, nor for ‘weavers’ nor their customers. ‘The perfection of police [provision of goods, not crime prevention in its 18th-century meaning], the extension of trade and manufacturers are noble and magnificent objects’, no less for Smith.
Such public spirited activities ‘make part of the great system of government, and the wheels of the political machine seem to move with more harmony and ease by means of them.’ Such so’ beautiful and grand a system’ makes us ‘uneasy till we remove any obstruction that can in the least disturb or encumber the regularity of its motions.’ These sentiments summarise, I believe, Smith’s self-perceived role as a ‘public spirited’ contributor in his works to the improvement of the British social system of which he studied and wrote in great detail.
All governments are valued only in proportion, he asserts, as they ‘promote the happiness of those who live under them.’ Sometimes we ‘value the means more than the end’ of promoting the ‘happiness of our fellow creatures’. Some men are driven by ‘public spirit’ but who are not ‘very sensible’ to ‘feelings of humanity’ and there are others of the ‘greatest humanity’ who are devoid of ‘public spirit’. He argues for approaching the persuasion of those ‘dead to ambition’ by addressing their admiration in how the palaces and conveniences, etc., of the rich function and are designed, though they do no more than what a hovel does; and to persuade someone wanting in public virtue, you should attend to how the ‘great system of public police’ works to evoke a sense of ‘public spirit’. This last reminds me of Bastiat’s powerful example of the feeding of Paris each morning through its market economy and without a single person directing the thousands employed in doing just that. What more persuasive an illustration is there of Smith’s assertions above to inspire any reader to support in a spirit of public service the continuation of market systems to do their work?
He concludes by asserting that ‘political disquisitions’ are useful (‘even the weakest and worst of them’) if they ‘animate the public passions of men, and rouse them to seek out the means of promoting the happiness of society.’ This last, sharply contrasts with pronouncements associated with the Chicago school, who consider concerns with public welfare as nothing to do with the purposes of the people directing a modern corporation, which they confine exclusively to that of maximising shareholder value, and nothing else.
Smith would not have agreed, and he certainly would not have limited his concerns to leaving the happiness of mankind to a non-existent ‘invisible hand’ or to the wayward self-interests of monopolists, polluters and protectionists.
© Gavin Kennedy 2006