Excellent Video from Marginal Revolution Except ....

Tyler Cowen of George Mason University posts a helpful video: “What did I learn from (another) re-read of Adam Smith?  HERE 

Comment

Tyler’s video is commendably short, to the point, and covers useful ground as a short introduction to some of Adam Smith’s ideas.  I am suitably impressed.  But then, I am regular reader of Tyler’s Blog, Marginal Revolution, one of several Blogs that I read emanating from GMU, plus excellent authors of books like Peter Boettke, also of GMU. Regular readers will also know I have had some excellent exchanges of ideas with Daniel Klein, also of GMU, on our different takes on Adam Smith’s use of the invisible hand metaphor since 2009, where despite our differences we remain on good personal terms, as befits relations between scholars in the Republic of Letters, also known as the Academy.

However, in the video, Tyler Cowen speaks, off camera to several themes illustrated by simple and clear OHP-type slides. 

Tyler announces that he first read Wealth Of Nations as a teenager, aged 15. And here, at least in my view, he makes an astonishing statement to the effect that slide no. 1 is devoted to “the invisible hand”.

The fact that the young Tyler linked the “invisible hand” metaphor to markets, which only appears once in Wealth Of Nations in Book 4 in relation to the motivations of some, but not all, merchants choosing not to send their capital abroad because of their fears for the security of their capital.  Their actions had unintentional consequences that Smith also identifies specifically as relating to the amount of total of “domestic revenue and employment”.  

Smith discussed markets in Book 1, along with the price system, supply and demand, and how they were related.  Noticeably, Smith made no mention of “an invisible hand” as having anything to do with the contents of Book 1.

From these facts, it is astonishing that Tyler linked the IH metaphor to markets at the age of 15 sometime in the 20^th century, particularly, as nobody even more familiar with Adam Smith’s Works throughout their adult lives, including some who knew him, and some leading political economists throughout the 100 years following its publication in 1776, mentioned the IH in the context to which Tyler links it.

Certainly, the alleged link was commonly expressed by scores of modern economists from the late 1940s and Tyler’s insight at 15 is probably sourced among them.  ‘Tis a pity that Tyler makes this claim because it gives credence to the modern myth that the IH metaphor has an obvious organic link to markets and that Adam Smith said so.  Moreover, the 15-year-old Tyler reading Wealth Of Nations for the very first of many times spotted the link at his first reading.   Amazing!

I am disappointed. I doubt many of his students will bother to check what they are told by their adult teachers about Adam Smith.   I know I didn’t until well into my academic career sometime in my 30s, though at first, purely in my reading that was unrelated to my then teaching syllabi as a Senior Lecturer in economics at Strathclyde University Business School.

Follow the link and watch the video.  Also bookmark Marginal Revolution HERE , plus Café Hayek HERE  and EconLog HERE