New Thoughts On The Invisible Hand Metaphor

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Gavin Kennedy

I have argued for seven years on Lost Legacy against modern interpretations of Adam Smith, which assert, contrary to the evidence in his books, that he ascribed some mystical general quality to his use on only two occasions of the well-known 17^th-18^th-century metaphor of an invisible hand.

So far I have not had much success – though the exceptions are most welcome and for which I express my thanks for the encouragement they provide.

I now think it is time to take the argument to those lingering on the fringes of accepting the case I have presented on Lost Legacy since 2005.

This means broadening my counter-argument to the modern consensus that Adam Smith’s use was not limited to the confines of a mere metaphor; it was, they claim, a profound statement that shook the world of academe, albeit nearly 200 years after he had died in 1790.

Consider Smith’s first published use of the metaphor of “an invisible hand” in his first book, Moral Sentiments, 1759 (Part IV, chapter 1).  In the course of a philosophical argument about the negative and positive personal experiences by those who make sacrifices in pursuit of riches, Smith refers to the “proud and unfeeling landlord”:

“It is to no purpose, that the proud and unfeeling landlord views his extensive fields, and without a thought for the wants of his brethren, in imagination consumes himself the whole harvest that grows upon them. The homely and vulgar proverb, that the eye is larger than the belly, never was more fully verified than with regard to him. The capacity of his stomach bears no proportion to the immensity of his desires, and will receive no more than that of the meanest peasant. The rest he is obliged to distribute among those, who prepare, in the nicest manner, that little which he himself makes use of, among those who fit up the palace in which this little is to be consumed, among those who provide and keep in order all the different baubles and trinkets, which are employed in the oeconomy of greatness; all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice. 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. These last too enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for” (TMS IV.1.10: 183-4).

In the academic literature dealing with this quotation the “invisible hand” is deemed to be variously, “the hand of god”, “Providence”, “the IH of the market”, “a presumption of liberty”, “a metaphor for national defense”, and many others (the latest, from Daniel Klein being it was an “allegory”).

I have argued, in debate with academic colleagues of various persuasions, that the IH metaphor is exactly that, a metaphor following the rules of English grammar. (For example, see Kennedy, G. “Adam Smith and the Role of the Metaphor of an Invisible Hand”, Economic Affairs, vo. 31, no 1. 2011).  In support of this argument, I refer to Adam Smith on metaphors in his “Lectures on Rhetoric and Belles Lettres” [1762] 1983, p. 29, in which he states that a metaphor describes in a “more striking and interesting manner its object”. This corresponds to the modern meaning of a metaphor given in the definitive Oxford English Dictionary.

What is the object of the IH metaphor in the above TMS quotation?  In the answer lies the resolution of this debate turns. To my disappointment, no one has challenged Smith’s interpretation – they have simply ignored it.

I identify the object of the IH metaphor in TMS as the absolute necessity of the landlord to feed his retainers, servants, and serfs (later his tenants).  Why is he compelled to distribute some of his harvests to the “thousands whom he employs”?  If he didn’t feed them how would they be able to work?   And if they didn’t work upon whom would the “proud and unfeeling landlord” depend on to prepare, seed, tend, and harvest his fields?  If they were not fed they could not labour, and if they didn’t labour they, and their families, would not be fed.  This mutual dependence is so obvious that I cannot see why my colleagues, in no way lacking the highest qualifications as senior academics, disregard the obvious in Smith’s meaning of his use of the invisible hand metaphor, to describe this mutual dependence in a “more striking and interesting manner”.

So let me draw further on Adam Smith to elucidate the nature of the relationship throughout the ages of shepherding and farming, much of it spent under regimes far more tyrannical than anything experienced since the appearance of commercial societies.  I turn to Adam Smith in the little read Book III of Wealth Of Nations. 

This extract gives a more factual historical account of the period covered by the feudal landlordism relevant to the time pictured by Smith when he described the regular behaviour of the “proud and unfeeling landlord” in “Moral Sentiments” of his being “led by an invisible hand” to share part of his harvest with the “thousands he employed”.  It reinforces my assertion that the metaphor describes in a “more striking and interesting manner” the nature of the landlord’s relationship with his serfs.

“In a country which has neither foreign commerce, nor any of the finer manufactures, a great proprietor, having nothing for which he can ex-change the greater part of the produce of his lands which is over and above the maintenance of the cultivators, consumes the whole in rustick hospitality at home. If this surplus produce is sufficient to maintain a hundred or a thousand men, he can make use of it in no other way than by maintaining a hundred or a thousand men. He is at all times, therefore, surrounded with a multitude of retainers and dependants, who having no equivalent to give in return for their maintenance, but being fed entirely by his bounty, must obey him, for the same reason that soldiers must obey the prince who pays them. …

…. A tenant at will, who possesses land sufficient to maintain his family for little more than a quit-rent, is as dependent upon the proprietor as any servant or retainer whatever, and must obey him with as little reserve. Such a proprietor, as he feeds his servants and retainers at his own house, so he feeds his tenants at their houses. The subsistence of both is derived from his bounty, and its continuance depends upon his good pleasure. ….

…. But what all the violence of the feudal institutions could never have effected, the silent and insensible operation of foreign commerce and manufactures gradually brought about. These gradually furnished the great proprietors with something for which they could exchange the         whole surplus produce of their lands, and which they could consume themselves without sharing it either with tenants or retainers.         All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons”  (WN III.iv.10)

The consequence over time, of “the silent and insensible operation of foreign commerce and manufactures gradually brought about”, was the reduction in the manpower base of the landlords.  These people were previously employed about the property; the men were mobilised in time of his need of a military force against rival landlords within the aristocratic orders of the feudal structure at home and abroad, and, on occasion, during regime instability, against the King. Dynastic quarrels were endemic over the millennia. 

But note, Smith described the sharing of the landlord’s harvests with the ‘thousands he employed’ in his service as the landlord being “led by an invisible hand” to do so.  That was an attractive metaphor for the necessity that led him to do so, by describing in a “more striking and interesting manner” the mutual dependence of those involved.  It certainly was not visible.  So the IH metaphor did its work remarkably well, so well that modern economists don’t see what is going on.  They invent other, often mystical quasi-theological explanations (‘there is an actual invisible hand’ at work) beside the clear and simple grammatical role of Smith using a metaphor. 

Yet, here, in Wealth Of Nations, he describes another situation where “the silent and insensible operation of foreign commerce and manufactures gradually brought about” another consequence of immense historic importance for the gradual intrusion of “foreign commerce and manufactures” (i.e., a new, 4^th, stage in the history of humans), that caused the decline in the feudal powers of an important older order that acted as a barrier to the revived commercial society that had been destroyed by the decline and fall of Rome in the 5^th century. This interregnum lasted through to the 15^th century, first as allodial successive war-lords, where tenure lasted to whomsoever could hold it against all challengers, then as  feudal tenures subject to the pleasure of dynastic kings. 

 Smith, I opine, could have used an IH metaphor for this invisible “silent and insensible operation”. However, he chose not to do so, though he did state clearly in his use of the IH metaphor in Wealth Of Nations that the risk-averse merchant “is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention”.  Well, this reference from Book III might be one of those “many other occasions” where the IH metaphor might work if, and only if, it is applied to its identified object, as all metaphors must be under English grammar, and Smith’s own teaching on Rhetoric, for which he was famous in his own day, if not so well known in modern times.

 We tend to see Smith as an economist first, less often as a moral philosopher, and hardly ever as a rhetorician, though he studied and rhetoric as a student at Glasgow (1737-40) and at Oxford (1740-46).  Subsequently, he taught rhetoric and belles letters from 1748-51 in Edinburgh and at Glasgow from 1751 to 1763.  His own notes on rhetoric were used by his successors, who took over his Edinburgh lectures, and by those who took over his professorial lectures in Glasgow. 

 ‘Tis a pity that modern scholars have remained indifferent to, if not ignorant of this major aspect of Adam Smith’s life’s work.