Saturday, September 08, 2012

From My Notebooks no.6

I was reading over my new paper, “The Myth of the Invisible Hand – A View From The Trenches”, written for the 44th Annual Conference of the UK History of Economics Society (4-6 September) (available from Social Science Research Network (SSRN)).  Many of the references from the Notebook I had entered in my paper, submitted yesterday (Friday).   However, this morning I was putting away notebooks, when, as you do, I paused and read a few pages of references I had not quoted from, as also happens. 
Among these, I noticed a couple of pages of notes from Edwin Canaan’s, ‘Adam Smith on Twentieth Century Finance’, June 1923, in his “An Economist Protests”, 1927, London: P. S. King and Sons:
In this extract, Canaan quotes from the famous “butcher, brewer, and baker” parable about negotiating the source of items for your dinner.   He notes that these gentlemen “provide us with our dinner, not because they love us, but because they wish to benefit themselves; they need not be ashamed of this fact. Let them go on doing their best to serve their own interests, and they serve us and society generally better than ‘if they affect to trade for the public good” and better than if the State tries to regulate their prices” (426).
He adds: “Such harmony as if found between the pursuit of self-interest and the general good is dependent on the existence of suitable institutions.” (428).
This is a most interesting re-discovery.  It shows Edwin Canaan (1861-1935), an excellent scholar of Adam Smith’s Works, who taught at the London School of Economics from 1895 to 1926 not mentioning the "invisible hand" metaphor even when he quoted from a few lines in the same paragraph.. Canaan was the editor of what became the most famous modern edition of Adam Smith’s Wealth of Nations (1904).  In 1937 this was re-issued by Random House, New York, and it is regularly cited from today.  I often consult it to read Canaan’s footnote references and comments on numerous passages by Smith.
Hence, the above quotes from my notebook, made in 2008, are of particular interest in respect of what they say – and don’t say about the famous “invisible hand” paragraph (WN IV.ii.9:456).    Note how Canaan brings the famous “Butcher, Brewer, and Baker’ paragraph (WN I.ii.2: 27) along-side parts of the “invisible hand” paragraph, without mentioning the “invisible hand”, as today’s readers would have expected it to be directly linked, which is a normal occurrence.  Moreover, Cannan, neither in his 1937 annotated edition, nor in his earlier editions, which he edited (he died in 1935), did not footnote, nor annotate the now, famous “invisible hand” paragraph at all.  His notes and comments throughout the text of Wealth Of Nations, are a particularly helpful part of his editions to Smithian scholars, even today.
I suggest this was because Canaan, in common with most other economists, did not believe the “invisible hand” metaphor was significant or worthy of his or readers’ attention, certainly not to the degree to which it became from the late 1940s onwards.  Therefore, I count this item of additional evidence against the recent outburst of collective mania (no too strong a word) for religious belief in the existence of “an invisible hand” working “miraculously” to lead the self-interests of even “selfish” people in an economy to “benefit” society, and to misattribute this “miracle” to Adam Smith (1723-90).


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