Thursday, February 28, 2008

'Providence' Was Not Necessary for Adam Smith's Argument But Allowed Him to Make His Argument





Gavin Kennedy

PRAXIS (5 December, 2007)) writes (here): “Invisible Hand - fragments from the history of a metaphor. (Part One. Featuring a lot of googling and almost no real knowledge)”, whichI mentioned a couple of days ago that I would return to his article with a comment (I have taken a short rest from copy-editing responses to my new book).

At times this goes by the name of the ‘invisible hand’; at times, by the name Providence. In the other famous ‘invisible hand’ passage, from ‘Theory of [the] Moral Sentiments’, Smith articulates an early version of the ‘trickle down’ theory of income distribution.
“The produce of the soil maintains at all times nearly that number of inhabitants which it is capable of maintaining. The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They 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 interest of the society, and afford means to the multiplication of the species. When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition.”
The invisible hand is here the hand of Providence – and the idea of Providence makes little sense outside an intellectual context which imagines a beneficent divine force behind the natural order of the world. Kennedy quotes Saint Augustine as a source from which Smith might have derived his phrase: “God’s hand is his power, which moves visible things by invisible means.” It’s surely not far fetched to see the idea of the invisible hand as invoking the hand of God.”

Interestingly, I addressed the same passage in the previous post on Doug Jones and you are referred to it. PRAXIS describes the invisible hand metaphor as Smith articulating “an early version of the ‘trickle down’ theory of income distribution”. A nice stylistic point but bear in mind the numbers involved among the great landlords: ‘the labours of all the thousands whom they employ’.

The landlords had no choice but to ensure the ‘thousands they employ’ survive between harvests and to do that they had to receive at least the customary level of subsistence. As the ‘thousands they employ’ also formed the lords’ armed retainers, who enforced his writ and fought his battles, it did not require anything mysterious to explain their behaviour.

They 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 interest of the society, and afford means to the multiplication of the species.”

Adam Smith wrote this knowing full well that in early Roman society the law required that the land be divided equally among the population and all attempts to carry the law out ended in failure. Inter-generational changes nullified the equal distribution; marriage alliances, inheritance maldistribution, growing populations, territorial expansion, local politics, or, if you like, human nature worked against it.

Roman law over the centuries created a massive litigation library of cases of arguments, some bloody, over inheritance disputes – historically quite advanced in scope and subtlety). So, ‘nearly the same distribution’ when tried, failed in the Roman Empire.

But the vast estates within the Roman empire and after it required labour to produce the sustenance and subsistence for most and its luxurious version for a few, without which it could not be sustained. Rome expanded militarily; barbarian lords and their subordinates depopulated the commercial networks of cities, the countryside was ravaged by warring Lords and ‘banditii’, and it took centuries to return to local peace.

The lords learned that feeding their employees was a necessity for their security to continue. They did not need the illusion of Providence to nudge them in this manner; self survival was sufficient. Indeed, ‘Providence did not divide the earth’; violent men did that on their own account.

In 18th century British society, Smith had no choice (self-preservation) but to accord ‘sage’ religious sanction to what violent usurpers (of each other) did on their own, though it was not ‘safe ‘to say so. His readers included many of the descendants of lords, who held sway politically in the king’s parliament, and his overarching aim was to persuade those who had influence, and those who influenced them, to adopt policies that would aid ‘progress towards opulence’, which would necessarily ‘spread to the inferior orders’ (the poor).

Picking St Augustine out from among 11 other authors for making a case for the invisible hand is disingenuous, if it is to be into a meaningful case that Adam Smith meant his use to be taken this way. The point is that the metaphor was well known to educated readers and Smith drew on it for his purpose, not to introduce metaphyiscal influences into his arguments. His case was perfectly explained on the two occasions he used in his books and the metaphor added nothing that was not perfectly understood from his two examples before he introduced it.

Here is a list of prior uses of the ‘invisible hand’ in literature, known to Adam Smith:
Homer (Iliad, 720 BC); ‘And from behind Zeus thrust him on
with exceeding mighty hand’;
Horace (65-8 BC), Ovid (Metamorphoses,
8 AD): ‘twisted and plied his invisible hand, inflicting wound within wound’;
Lactantius (De divinio praemio, c.250-325): ‘invisibilis’;
Augustine, 354-430, “God’s ‘hand’ is his power, which moves
visible things by invisible means’ (Concerning the City of God, xii, 24);
Shakespeare, ‘Thy Bloody and Invisible Hand’, (Macbeth, 2.3
; 1605);
Daniel Defoe, ‘A sudden Blow from an almost invisible Hand,
blasted all my Happiness’, in Moll Flanders (1722); ‘it has all been brought
to pass by an invisible hand’ (Colonel Jack, 1723);
Nicolas Lenglet Dufesnoy said that an “invisible hand” has
power over “what happens under our eyes”;
Charles Rollin (1661-1741), described as ‘very well known
in English and Scottish Universities’, said of the military successes of
Israeli Kings “the rapidity of their consequences ought to have enabled them to discern the invisible hand which conducted them”;
Charles Bonnet (whom Smith befriended in Geneva in 1765)
wrote of the economy of the animal: “It is led towards its end by an
invisible hand”;
Jean-Baptiste Robinet (a translator of Hume) refers to
fresh water as “those basins of mineral water, prepared by an invisible
Voltaire (1694-1178) in Oedipe (1718) writes: “Tremble,
unfortunate King, an invisible hand suspends above your head’; and ‘an
invisible hand pushed away my presents’;
● Professor W. Leechman (1706-1785) (1755): ‘the silent and
unseen hand of an all-wise Providence.'
Kant E.(1784) ‘Universal History’: ‘leads on to infer the
design of a wise creator and not [the hand of a malicious spirit]’.

Praxis stated: ‘It’s surely not far fetched to see the idea of the invisible hand as invoking the hand of God’, as if this is self-evident.’ That may be true for Praxis, but it is stretching it for Adam Smith (back projection onto Adam Smith is a risky business). What were Homer and Horace on about? They both lived in societies that believed in invisible gods (‘pusillanimous superstition’ Smith called it in his History of Astronomy; see previous post).

Moreover, Praxis must explain what ‘an invisible hand’ brought to the subjects in Moral Sentiments (minimal subsistence for self-preservation of Lord) and Wealth Of Nations (risk-avoidance of some merchants) that were left unexplained by Adam Smith’s clear prior explanations of the events covered by the invisible hand metaphor?

This question must be answered just to get past first base before going on to explain the explanatory power of so-called invisible hands in the wilder (and superstitious) use invisible hands to explain market forces in the wider economy, which was not explained by Adam Smith (and all economists since) about how markets work.

A graduate student answering a question on markets in an examination to prove his or her competence, who slipped in as the answer that it’s all achieved by ‘invisible hands’ would hardly justify a pass mark, let alone a top grade, if that is all that was said. But if he or she demonstrated competently how markets work there would be no need whatsoever to invoke an invisible hand into the explanation, and if it was it would not justify a top grade (evidence of time wasting). If there is need, then the competence standard is not reached.

But for Smith’s audience, despite the newly sceptical age in which he wrote, the concept of Providence could be invoked without provoking too many secularist doubts.”

Praxis misunderstands 18th-century Scotland. It was not ‘secularist doubts’ that were foremost in the minds of Enlightenment thinkers. It was the risk of provoking religious doubts among those in a position to make life uncomfortable for those who appeared to doubt revealed religion.

Using Providence as a code word had the same soporific effect on the zealots as experienced in the declining days of the Soviet Union and East Europe, which impelled intellectual doubters of the ‘glories’ of communism to work approved passages into their speeches, articles and books to ward off the attentions of the State censors.


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