Wikipedia Should be Treated With Caution
Linda Garcia PhD writes (18 June) in her Blog HERE
“Old adages die hard. Just consider the longevity of Adam’s Smith characterization of the self-regulating market as an invisible hand in his classic work, The Wealth of Nations. As Smith opined, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
This sentiment, a persistent trope reverberating from one generation to the next, has become a center-piece of the American ethos as well as a mainstay of the Republican party.”
Linda Garcia is an academic with a background in political science.
She does not believe in the modern usage of the “invisible hand” but she accepts the modern attribution of it to Adam Smith, and associates it with core Republican Party values (of which I shall say nothing, as Lost Legacy does not comment on politics except in the country, Scotland, where I vote).
Her prime mistake: Adam Smith never said anything about “the self-regulating market as an invisible hand in his classic work, The Wealth of Nations”, (care of Wikipedia) and nor, for that matter, did he say it anywhere else.
Her second mistake is to quote the well-worn, and much misunderstood sentence on the “Butcher, Brewer, and Baker’s” behaviour when bargaining with customers on the prices of the ingredients for their dinners. [Incidentally there is no reference to an “invisible hand” in that paragraph or chapter.]
Smith discusses his advice on how best to bargain with them. Self-evidently, there is not enough benevolence to go round for everybody who would like their dinners as free gifts from the benevolence of others.
Moreover, Smith advises readers to appeal not to their own self-interests to persuade the 'butcher, brewer, and baker’ to supply them with their dinners, but to “address" the self-interests of the “butcher, brewer, and baker”, even adding that readers should not talk of their own interests, but talk only of those of their potential bargaining partners.
In short, we address our own self-interests best by addressing the self-interests of those with whom we wish to persuade. Two self-interested egoists would never agree to exchange anything.
This is an entirely different slant on Smith’s views on the mediation of self-interests to that presented by modern economists, who invented the modern myth of the so-called invisible hand at the start of the Cold War to emphasise (in my view) the superiority of markets over central planning (see Paul Samuelson’s, Economics: an introductory analysis, p 36, 1948, McGraw-Hill).