Saturday, November 10, 2007

Invisible Hand no 370

In a Blog, entitled: “-Fighting Liberalism One Post At A Time... a blog by butch morgan” (here) I find:

'Trower' is a Republican running against John Murtha in Pennsylvania's 12th congressional district. From his site: ‘I am a Conservative. … I believe prosperity is best ensured by what Adam Smith called the “invisible hand” of a natural, price driven economy.


Whatever the merits of Trower’s political campaign the Adam Smith part unhappily is false, as discussed here many times. The reference to the use of the metaphor of ‘an invisible hand’ had nothing to do with a ‘natural, price driven economy’.

Wealth Of Nations discuses in detail and extensively the workings of a commercial economy in 18th-century Britain in Books I and II and does not mention any role for the ‘invisible hand’.

When Adam Smith sets out his principles upon which markets work, division of labour, specialisation, extent of the market, propensity to truck, barter, and exchange, self-betterment, natural and market prices, accumulation of fixed capital and circulating capital, the role of wages, rent, and profit, the role of money, frugality and savings, prodigality and waste, productive and unproductive labour, causes of growth and progress towards opulence, he does not mention ‘an invisible hand’.

If his singular use of the metaphor of the invisible hand in Wealth Of Nations (a common enough literary metaphor in the 17th and 18th centuries, and in Shakespeare in 1605, and in classical Latin and Greek dramas) had the importance attached to it by modern economists and political commentators (of both left and right orientations), it is surprising that he never mentioned it in relations to markets at all.

His only use of the metaphor an invisible hand is in Book IV (WN IV.ii.9.p 456) in relations to risk avoidance; he gives 51 examples in Books I and II of Wealth Of Nations where the alleged properties of the disembodied body if there was one operating in society and markets quite clearly do not work.

The public benefit is compromised in these instances, often by the behaviours of merchants, manufacturers, legislators, rulers, and people who influence them.



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