Tuesday, January 19, 2010

Adam Smith's Close Colleague Did Not Mention the Invisible Hand

I had an opportunity today to spend it in University of Edinburgh library and among the items I selected from the shelves was volume IX of Dugald Stewart’s Collected Works, edited by Sir William Hamilton, Bart, and published in Edinburgh by Thomas Constable and Co., (and Little Brown, and Co. Boston). This volume contains, Dugald Stewart’s, Lectures on Political Economy, volume II, delivered in 1801.

In Chapter III, ‘Of Trade’, Stewart discusses, not uncritically, Smith’s Wealth Of Nations and quotes as an extended footnote, containing an abstract of the first 8 chapters of Book IV. This includes in ‘the following satisfactory and conclusive manner’, a direct quotation of the paragraphs from Chapter 2, including the famous paragraph 9 containing his reference to ‘an invisible hand’.

Dugald makes no comment on Smith’s use of the metaphor of ‘an invisible hand’. Now Dugald Stewart was a close, intimate friend on Smith’s (his father, Michael Stewart, had been a fellow student of Smith’s at Glasgow and they remained friends while Michael was the professor of mathematics at Edinburgh (a chair that Dugald 'inherited. before switching to the professor of moral philosophy). Indeed, Dugald gave the Eulogy on Smith at a meeting of the Royal Society of Edinburgh in 1793.

That Dugald did not mention the alleged significance of the invisible hand, which some modern economists insist was Adam Smith’s ‘greatest idea’, neither in his 1793 eulogy, nor in his 1801 lectures, is in itself highly significant. If anybody would have known of Smith’s alleged attachment to his so-called ‘greatest idea’, his ‘concept’, ‘theory’, or ‘doctrine’, and its significance, or otherwise, it would have been Dugald Stewart, but he never mentioned anything about it, even in his lectures on political economy.

This suggests that the modern certainties of the significance to Adam Smith of the metaphor of ‘an invisible hand’, are highly exaggerated at the very least, and, in my view, wholly invented. The metaphor does not appear to have meant anything to Dugald Stewart.

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