Monday, November 05, 2007

Invisible Hand no 369

Peter Robb, The Ottawa Citizen, writes “Taking care of ourselves -- and each other”, 5 November, here:

One of the great pleasures of being an editorial writer is participating in editorial board meetings, where we meet with newsmakers, intellectuals and other interesting people or groups. The topics are varied and always informative.
This past week we hosted two excellent discussions, both of which provoked lively exchanges and also helped me understand more clearly the value of what Adam Smith famously described as the "invisible hand" more than two centuries ago.

"Every individual," wrote Smith, "neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."


Comment

Peter Robb, The Ottawa Citizen, writes “Taking care of ourselves -- and each other”, 5 November, here:
http://www.canada.com/ottawacitizen/news/story.html?id=232b27d4-8b9c-493a-8494-c25f771ed633&p=2
“One of the great pleasures of being an editorial writer is participating in editorial board meetings, where we meet with newsmakers, intellectuals and other interesting people or groups. The topics are varied and always informative.
This past week we hosted two excellent discussions, both of which provoked lively exchanges and also helped me understand more clearly the value of what Adam Smith famously described as the "invisible hand" more than two centuries ago.
"Every individual," wrote Smith, "neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention."

Comment
In illustration of his theme, Peter Robb quotes the example of an initiative from the Forestry Products Association of Canada, a trade organization, which is promoting green harvesting of trees and the green production of the by-products of wood.

Why this remind him of the value of Adam Smith’s use of a metaphor of an invisible hand he does not say. This metaphor followed Adam Smith’s clear explanation of the risk aversion of individual merchants would lead them to invest locally rather than at a distance, which, because the whole is the arithmetical sum of its parts, it would lead to more local investment in the absence of protectionist measures to curb foreign imports.

It was the individual decisions of the merchants, not the direction of someone (the sovereign, the government, or a trade guild) that led to the outcome he describes.
Peter Robb’s quotation is part of the sole quotation in Wealth Of Nations that mentions the invisible hand metaphor (WN IV.ii.9: p 456).

0 Comments:

Post a comment

<< Home