THE PSEUDO-SCIENCE OF THE INVISIBLE HAND
I found this piece on my desktop in an unused, open file, dated, 27 October, but I have no idea from where it came or by whom it was written (I refer to him/her as the Author - if you recognise who wrote it or where its from, please let me know in the comments).
It happens to combine two threads I have recently been discussing: first, gravity as a metaphor in Adam Smith’s ‘Wealth Of Nations’ (to appear, hopefully in ‘Economic Theory’, an online journal, edited and refereed by economists as: “Adam Smith’s Use of the “Gravitation Metaphor”, in a couple of months; second, my regular comments on Smith’s use of “an invisible hand” as a metaphor for motivated actions of agents, which may have unintended consequences that may add or detract from human welfare.
The Author’s notions that “gravity” and “invisible hands” as related similies/ metaphors stretches credulity by giving a scientific gloss to his/her notions about Smith’s use of the ‘invisible hand’ as a metaphor with a somewhat tortured resemblance, “more comparable to natural selection, where complexity and design arise in nature from spontaneous order without the assistance of an outside agent.”
From there the Author claims that “market forces allow individuals within the market place to seek their own rational self-interests through voluntary trade and labor”. There is no explanation of the assertion that people “seek their own rational self-interests”, when even casual observation sees individuals expressing their many different “self-interests” in market relationships that can be wildly different in content and scope from a common sense of “rationality”.
For the Author to argue that either gravity or magnetism equate to “invisible hands” does not imply “that they are “magical” is precisely what is implied. The Physics of gravity is pretty well understood in science. As a force it can be measured and movements associated with gravity can be precisely predicted well in advance, to a thousandth of a second. Now do that with ‘invisible hands’! Market forces, in the guise of the “Invisible Hand of the Free Market”, says the Author, can be “empirically observed, tested, and researched”. Oh Yes? Is the Author sure? Even in the higher maths of General Equilibrium no mathematical term appears for “the Invisible hand”!
Moreover, there is nothing invisible in market forces! They operate soley by VISIBLE prices! Market cannot work without visible prices, so what role is left for an invisible hand?
So when we look back to how far we have come from the economics of the Forest life of the hunters and gatherers 40,000 years ago (in Europe and Africa) to where we are in the developed market economies today it is plain silly for the Author to suggest we thank the ‘invisible hand”. It played no role in the Forest, or in Agriculture or in the emergence of markets from classical times.
It was a metaphor for the motives of individuals who acted in pursuit of their intended consequences, and some, but not all, of those intended consequences also could have unintended consequences that could in turn have benefitted society, sometimes generations of people, even centuries and millennia later.
We call this history and pre-history and modern sciences - archeology, anthropology, natural and social sciences, and so on - can identify a great deal about particular causes of events, without turning to mythical “invisible hands” or God explanations, that explain nothing.