Wednesday, September 09, 2009

And so the Myth of the Invisible Hand is spread (by economists!)

Members of the History of Economics ought to know better but so deep is the disinformation about Adam Smith (the one born in Kirkcaldy, Fife, Scotland, in 1723, not the one invented in Chicago in the 1930s) that an almost futile (its too serious to be utterly laughable) exercise is under way.

A member is giving a “an interactive lecture” to a “non-academic community on the invisible hand as a ‘great idea’ in history that has changed the way we think about the world” and seeks help to access video material on the invisible hand.

The idea of illustrating visually the ‘invisible hand’ is a bit odd, but leave that aside. The lecturer wants “to spice together some images and clips from popular movies, tv, or art that make reference to the idea, and I would appreciate your help.”

So far he has collected “the reference to Smith and the hand in "A Beautiful Mind," "Wall Street," and an early episode of "Family Ties" by the Friedman-loving Alex P. Keaton” and he wants to know if members “know of other films or TV shows that either directly reference the invisible hand or allude to it or an interpretation of it?

History of Economics Society members are ever willing to help each other with research requests and so far (today) 6 members have made suggestions:

Other People's Money, Norman Jewison 1991 (esp. Gregory Peck's & Danny de Vito's addresses to the shareholders' assembly).

“Grapes of Wrath, John Ford 1940 ("I liked the book better", said the goat chewing on the reel).

Salt of the Earth, Herbert J. Biberman 1954 (The invisible hand's unseemly

Man Friday, Jack Gold 1975 (another take on the Robinsoniads, Richard Roundtree and Peter O Toole at their very best).

and of course,

Aufstieg und Fall der Stadt Mahagonny (Rise and Fall of the City of
Mahagonny) opera Bertolt Brecht-Kurt Weil (1930) ("Oh show us the way to the next pretty dollar").”

“Maybe one way to get your audience thinking about scarcity and resource allocation is via a time-traveling Jean Luc Picard of Star Trek fame trying to explain the economics of his time. You could use the segment from 1:45 to 2:10 from

This includes the lines:

"Money doesn't exist in the 24th century."


"The acquisition of wealth is no longer the driving force in our lives."

Googling "Star Trek economics" might lead you to other snippets or ideas that you might be able to use.”

“I like the Johhny Depp remake of Charlie and the Chocolate Factory.
Willy Wonka wants to make (invent) things that people want to buy out of his own self-interest to create. And it shows too the needed trust in 'capitalism', as in when he closes the factory for a while because his trade secrets were stolen. It's also interesting on the creative destruction of capitalism as when Charlie's Dad loses his job to automation, but then gets hired back to fix the very machine which replaced him. And it's a Dickensian, pre-welfare state because Charlie's whole family lives together and takes care of each other no matter how poor they are.

It's definitely a movie full of history of econ thought (and some Theory of Moral Sentiments too!) parables.”

“South Park's "Gnomes" episode never mentions Smith or the invisible hand by name, but is interpretable in light of it.

Here's a direct link to the episode:

Here's Paul Cantor's take:”

“Did you see "Commanding Heights" (PBS)? It is available through their website. There are three parts of two hours of material and this series does a rather impressing job reporting on the role of economists, including Adam Smith, in the globalization process.”

“The movie Tucker, the Man and his Dream is about the entrepreneurial drive to serve consumers for profit. Its not a perfect statement of Smith, but it brings up not only the invisible hand part of Smith, but also the mercantilist type efforts to interfere with invisible hand mechanisms that Smith criticized.”

But so far, there are no comments by fellow members of the History of Economics Society pointing out that Adam Smith’s slight reference to “an invisible hand” did not have the implications of the theme that the suggested video references imply.

So ingrained among academia is the Chicago re-invention of Smith’s metaphor among modern economists (very few of whom are actually familiar with the exact context of Adam Smith’s three citations that an inordinate extention of its meaning has gained wide, almost ubiquitous, circulation since the mid-20th century.

Smith's use of the popular 18th-century metaphor of 'an invisible hand', was not about how commercial markets worked, as described in Books I and II of Wealth Of Nations, it was about the self-deceptions of ambitious individuals in early commercial society, and was about pagan superstition in ancient Rome) that such a request for video material is almost immediately followed by the extensive selection above (no doubt more is to come as the day in the US moves towards midnight).

The references to Smith by Hollywood scriptwriters in the films “A Beautiful Mind" and "Wall Street" are erroneous, even counter-factual (see Lost Legacy archives where I discussed their errors against Smith’s actual writings) and I do not hold much hope that the other references will do other than continue the distortions.

For background to the Invisible Hand debate link HERE in which I trace its background: "Adam Smith and the Invisible Hand: from metaphor to myth" (published in Econ Journal Watch in May and September).



Blogger Andres said...

Finally someone notices the error in the way Smith's thought is portrayed in the famous bar scene in "A beautiful Mind." I've since then wondered if Nash himself believed such a thing. Considering the way Economic Thought was taught at that time in America, it could have been the case.

12:37 am  
Blogger Gavin Kennedy said...

I do not know if Nash thought similarly, but in economics 101, the guys were competing with each other for a liasion with a monopsonist (single "buyer", like DOD or MOD).

A monopsonist can act to exploit the "market" for her favours. I am not sure that this has anything to do with Smith's views on markets, or human nature.


7:22 pm  

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