How Does An Invisible Hand Clap?
Melanie Lindner writes "Oil Primed For A Fall" (9 January) in Forbes.com:
‘If an invisible hand claps, do investors hear it? Apparently, yes.
After hitting a record $100 per barrel price just last week, the World Bank is predicting that high oil prices will weaken demand and send a barrel of crude back down to $84 by this time next year. That would be a pretty nifty illustration of Adam Smith's concept of the "invisible hand" that guides free markets.’
Comment
Outside of Zen Buddhism, how does ‘an invisible hand’ clap?
‘That would be a pretty nifty illustration of Adam Smith's concept of the "invisible hand" that guides free markets’
Excuse me, but surely attendees of economics 101 and Greg Mankiw’s ec10 (here), all learn that when supply exceeds the quantify demanded at a current price, then the price will decline in time.
So how does an invisible hand intervene? What does it do that isn’t being done by the ‘weakening’ of demand?
Nothing, of course. It’s just a gratuitous purloining of a metaphor that had nothing to do with markets (at least in Adam Smith’s case) applied by Melanie Lindner to decorate her article with a profundity it does not deserve.
Did she ever read Wealth Of Nations to locate the sole use he made of the fairly common 18th-century literary metaphor of ‘an invisible hand’? Or is from a quotation she read that asserts that Adam Smith was talking about markets when he used it?
He wasn’t, of course. He used it in reference to his explanation for risk avoidance (in Book IV.ii. page 456). His analysis of markets is in Book I during which he does not mention anything about an invisible hand, or two invisible hands clapping.
‘If an invisible hand claps, do investors hear it? Apparently, yes.
After hitting a record $100 per barrel price just last week, the World Bank is predicting that high oil prices will weaken demand and send a barrel of crude back down to $84 by this time next year. That would be a pretty nifty illustration of Adam Smith's concept of the "invisible hand" that guides free markets.’
Comment
Outside of Zen Buddhism, how does ‘an invisible hand’ clap?
‘That would be a pretty nifty illustration of Adam Smith's concept of the "invisible hand" that guides free markets’
Excuse me, but surely attendees of economics 101 and Greg Mankiw’s ec10 (here), all learn that when supply exceeds the quantify demanded at a current price, then the price will decline in time.
So how does an invisible hand intervene? What does it do that isn’t being done by the ‘weakening’ of demand?
Nothing, of course. It’s just a gratuitous purloining of a metaphor that had nothing to do with markets (at least in Adam Smith’s case) applied by Melanie Lindner to decorate her article with a profundity it does not deserve.
Did she ever read Wealth Of Nations to locate the sole use he made of the fairly common 18th-century literary metaphor of ‘an invisible hand’? Or is from a quotation she read that asserts that Adam Smith was talking about markets when he used it?
He wasn’t, of course. He used it in reference to his explanation for risk avoidance (in Book IV.ii. page 456). His analysis of markets is in Book I during which he does not mention anything about an invisible hand, or two invisible hands clapping.
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