From Obscurity to Clarity
“Obviously, the
Pirates want to give the population a share to define this aim. Other parties,
however, often leave this, figuratively spoken with Adam Smith, to the
invisible hand of the market. In my view, the popularity of the Pirates is
based on the feeling expressed by a growing number of people that this
invisible hand prevents them from participating in the common wealth.”
Comment
What this means is hard to figure. By dragging in a mythical Adam Smith
claiming that he said anything about “the invisible hand of the market”, only
obscures its meaning even more. As
the mythical invisible-hand does not exist in any form that the inventors’
imagine – it is only a metaphor and therefore does not “prevent them from
participating in the common wealth” and as a metaphor it has no metaphoric
connection with markets – it would pay such believers to investigate to what
Adam Smith was referring when he used that figure of speech only once in Wealth
Of Nations.
For a start they
should read carefully the first 9 paragraphs of Book IV.ii.1-9: 452-56. There is nothing about markets; there
are several mentions of some, but not all, merchants who prefer to invest
locally rather than abroad because of their felt insecurity of letting their
capital out of their sight in strange foreign countries to people they know
less well and under justice systems they distrust. It is their insecurity (mentioned three times in
paragraph 9) that cannot be seen by observers because a person’s state of mind
is invisible (unlike very visible prices and quantities).
Metaphorically,
insecurity is ‘an invisible hand’ that leads them to invest locally. Hardly the greatest idea in the history
of social science! But it was a
great use of a popular 17th-18th -century metaphor by Adam Smith.
2 Comments:
"Metaphorically, insecurity is ‘an invisible hand’ that leads them to invest locally. Hardly the greatest idea in the history of social science!"
If so, what a waste of a great metaphor. No wonder other, more robust meanings have been given to it in the 20th century, like meaning also the pursuit of self-interest and activities involving the free market.
However, an invisible hand metaphorically basically meaning insecurity - economic insecurity, is a great one. Humans in general are an insecure lot and the world is full of all kinds of economic insecurities. At some point investors have become insecure about investing domestically and instead have invested elsewhere. So, then, an invisible hand, of Smith's meaning, can turn on itself.
Norm Chomsky enlightened us to this ironic twist (twist of the wrist) of Smith's invisible hand.
"Metaphorically, insecurity is ‘an invisible hand’ that leads them to invest locally. Hardly the greatest idea in the history of social science!"
There is certainly an abundance of economic insecurity in Europe these days. And what is the invisible hand leading European investors to do with their wealth? Certainly not to invest locally because at the moment that's a gamble. Instead investors are investing abroad and putting their money into property in London. In this case the invisible hand is working in reverse to what Smith imagined.
Imagine that, the UK and London still being a heaven in which to park one's money.
Someday, when Europe emerges from it economic doldrums and is rebuilding the invisible hand (I was going to say the 'investment hand') will lead investors to reinvest in Europe because of the many bargains and investment opportunities there will be there.
'An invisible hand' is not just a great metaphor like I wrote above. It is a beautiful metaphor, like "a beautiful mind'.
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