Monday, August 06, 2007

To Buy an i-Phone You Don't Need an Invisible Hand

Professor Jonathan B. Wight is a professor of economics at the University of Richmond and author of Saving Adam Smith: A Tale of Wealth, Transformation, and Virtue. He posted “Adam Smith and the iPhone” (4 August) on (here): which has attracted a fair amount of notice in the Blogosphere.

Mark Thoma, for instance, picked it up on his popular Blog (among economists) Here:

Before I comment, a bit of background: last July, Professor Wight, published an introduction to a new edition of Adam Smith’s Wealth Of Nations, (Harriman House edition, UK) and I commented on Lost Legacy (4 July) on his references to the meaning of the metaphor, ‘an invisible hand’. I also sent him a copy of my paper: ‘Adam Smith’s Invisible Hand: from metaphor to myth’ and he replied two days later with his interesting and helpful comments, (to which I shall respond to when I have finished the manuscript for my new book: ‘Adam Smith: the moral philosopher and his thinking). Professor Wight argues that Smith meant by the invisible hand a set of ‘human instincts’.

However, Professor Wight also included this sentence about my paper:
By the way, I applaud your connection of beauty to the invisible hand, because many authors pass right by this.” (Letter 7 July: J Wight).

He writes in his article a relevant and most apposite piece, and does an excellent job on explaining Adam Smith’s concept (except for his reference to an ‘invisible hand, of course’!):

Smith’s system of progress through competition thus relies on consumers who stimulate markets by buying ever-more beautiful goods. The “invisible hand” operates through the self-delusion that compels people to think happiness depends on owning machines that perform feats of little actual utility. This stimulates technological innovation, which paradoxically may produce genuine human progress in the long run.”

(GK: How does ‘an invisible hand’ operate on the ‘self-delusion’ of people?)

I give a short extract from my paper: ‘Adam Smith’s Invisible Hand: from metaphor to myth’, by Gavin Kennedy, June 2007, History of Economics Society, Fairfax, Virginia:

Smith acknowledges philosophers before him recognised utility was a ‘principal’ source of beauty, specifically citing David Hume’s definition that the ‘utility of any object … pleases the master [owner] by perpetually suggesting to him the pleasure of conveniency which it is fitted to promote.’ Smith agrees that beauty is closely bound with admiration for an artefact’s ‘fitness for purpose’: ‘Of the beauty which the appearance of utility bestows upon all the production of art, and of the extensive influence of this species of beauty’.

Smith observed that ‘any production of art, should often be more valued, than the very end for which it is unintended’. He found it highly significant that people were more interested in ‘the perfection of the machine that serves to attain’ some end, than they were in the end itself. By ‘art’, as understood in the 18th century, Smith was not referring to ‘works of art’ (sculpture or painting), but to the ‘art’ (skill, knowledge) of making any mechanical or manufactured item, or useful piece of knowledge that serves a purpose, which can be appreciated today by consulting popular contemporary encyclopaedias, and noticing the number of popular societies during the Enlightenment for the study of ‘arts’, for example the Edinburgh Society for Encouraging Arts, Sciences, Manufactures, and Agriculture in Scotland, founded in 1755.

Smith describes the tragedy the ‘poor man’s son, whom heaven in its anger has visited with ambition’, which causes him to devote himself ‘for ever to the pursuit of wealth and greatness’ and to sacrifice the ‘real tranquillity that is at all times in his power’. The rich were admired not so much for their ‘superior ease or pleasure which they are supposed to enjoy’ as they were for their possession of ‘numberless artificial and elegant contrivances for promoting this ease or pleasure.’ Nobody imagined that the rich were really happier than others, but they did imagine that the rich ‘possess more means of happiness’.

When the poor man’s son reaches old age, ‘reduced either by spleen or disease’ he ‘curses ambition’ and ‘vainly regrets’ giving up ‘foolishly’ the ‘pleasures and ease’ of his youth for what he acquired in pursuit of happiness. He realises too that power and riches are ‘enormous and operose machines contrived to produce a few trifling conveniences to the body’ and in his melancholy elaboration of this ‘splenetic philosophy’ he suffers ‘sickness and low spirits’. However, in happier times ‘of ease and prosperity’, before low spirits sets in, his ambition and optimism is transformed into admiration of the beauty of ‘the palaces and œconomy of the great’ because he believes that everything in them is ‘adapted to promote their ease, to prevent their wants, to gratify their wishes, and to amuse and entertain their most frivolous desires.’ It is only later as a rich man that he realises that his happiness is ephemeral, lacking the satisfaction he strove for, and not worth the anxiety, fear and sorrow to which he was exposed while acquiring his riches. These contrasting perspectives run right through society, reaching all levels, affecting individuals in all stages of the delusion.

Smith turns the direction of his argument from these deceptions to the role that the striving in pursuit of such mirages means for society. For society’s sake, he assures us, it is well that these ‘deceptions’ are widespread, because they ‘rouse and keep in motion the industry of mankind’.

It is this which first prompted them to cultivate the ground, to build houses, to found cities and commonwealths, and to invent and improve all the sciences and the arts, which ennoble and embellish human life; which have entirely changed the whole face of the globe, have turned the rude forests into agreeable and fertile plains, and make the trackless and barren ocean a new fund of subsistence, and the great high road of communication to the different nations of the earth.’

[Readers interested in receiving an electronic copy of my paper, 'Adam Smith’s Invisible Hand: from metaphor to myth’, by Gavin Kennedy, please send a message to my email by re-arranging the following words in the usual manner: {gavin com negweb} – your address will not be stored, nor will you receive unsolicited mail]


1 TMS IV.1.2: p 179
2 TMS IV.1.3: p 179-80
3 Chambers, E. 1728. ‘Cyclopaedia; or a Universal Dictionary of Arts and Sciences, Containing an Explication of the Terms ... in the Several Arts, both Liberal and Mechanical’, London; Diderot, D. et D'Alembert,1751-77. Encyclopédie, ou Dictionnaire raisonné des sciences, des arts et des métiers, par une société de gens de lettres, mis en ordre par M. Diderot de l'Académie des Sciences et Belles-Lettres de Prusse, et quant à la partie mathématique, par M. d'Alembert de l'Académie royale des Sciences de Paris, de celle de Prusse et de la Société royale de Londres (‘a Systematic Dictionary of Science, Arts, and the Trades’), 32-vols, Paris
4 Ross, I. S. Life of…p 141
5 TMS IV.1.8: p180-1; Frey, B. S. and Stutzer, A. 2001. Happiness and Economics: How the Economy and Institutions Affect Human Well-Being, Princeton University Press; Layard, R. 2005. Lessons from the New Science, Penguin, London
6 TMS IV.1.8: p 181
7 TMS IV.1.8: p 182-3
8 TMS IV.1.10: p 183
8 TMS IV.1.10: p 183-4


Post a comment

<< Home