Not Quite Right
Robert Nielson Blogs at Opus LibertasHERE http://lobotero.com/2013/01/04/24736/
“The Flaw of the Invisible Hand”
“Introductions to economics usually start with gushing tales about the magic of the free market. It is usually stated that the free market allows everyone to get the best quality goods at the cheapest prices. The magical invisible hand guides everyone to the best place without any unnecessary government intervention. Below is a link to a video typical of the kind.”
There is no invisible hand. It is a metaphor for why people in particular cases act as they do (Adam Smith gave only two specific examples). The metaphor “describes in a more striking and interesting manner” its grammatical object (Smith Lectures on Rhetoric and Belles Lettres”, 1762-3, p. 29).
Paul Samuelson popularised the false idea that ‘selfishness’ led to “public benefits”, attributing it to Adam Smith (Samuelson, Economics, 1948, p 36). Five million readers later and the IH myth is now entrenched in public discourse.
Example, merchants seek protection from imports, preferring domestic monopoly – why? Because they are led by their self-interest. This does not benefit the public. The IH myth fails!