PODCAST DEBATE ON ADAM SMITH'S USE OF THE INVISIBLE HAND METAPHOR

Introductory Comments

I came across this short essay this week from Larry Wilmore’s Blog Thought du jour (Semi-daily posts, related largely to economics and government policy) HERE

http://larrywillmore.net/blog/2015/01/24/adam-smiths-invisible-hand/

I know two of the speakers in the podcast, academic Marianne Johnson, who assisted Warren Samuels, while he was very seriously ill, in preparing his final manuscript of “Erasing the Invisible Hand: essays on an elusive and misused concept in economics” (2011. Cambridge University Press), and  Eamonn Butler, Director of the Adam Smith Institute (London), a well known and renowned figure in Smithian modern economics and its applications in the 21st century. (Disclosure: I am a Fellow of the ASI).

Below is a straight summary of the Podcast discussion subjects intended for the illuminating the commentator’s discussion. 

I would finally point out here that the statement by Benjamen Walker that: “The History of Astronomy (written before 1758, but published in 1811)” is incorrect. It was first published  as “The Principles which lead and direct Philosophical Enquiries illustrated by the History of Astonomy”, in 1795 and not as asserted in 1811. 

The first, 1795 edition of The History of Atronomy was prepared by James Black and James Hutton who were directed by Adam Smith on his death bed to publish it and not to burn it with most of his other unfinished manuscripts of his life’s work, just before his death in 1790, with which instructions they complied in 1795.

The 1811 edition was published by Dugald Stewart, a family friend of Adam Smith’s, the son of Professor Michael Stewart, Edinburgh University, who was a student friend of Smth’s at Glasgow University, 1737-40, and remained close to him as a friend as an adult. Dugald Stewart published a volume, containing the Astronomy Essay, as Volume V of his edition of Smith’s Works in 1811 (in which edition Stewart somewhat sneekily removed the names of both Black and Hutton the original editors).

As Thought du jour’s introductory statements are fairly neutral, I shall not discuss them on this occasion. (Regular readers will be familiar with my critique).

Thought du jour’s Report:

Adam Smith’s ‘invisible hand’

What, exactly, is the “invisible hand”, a phrase attributed to Adam Smith? Is it a sound economic principle or a myth propagated by the misreading of Smith? All this continues to attract controversy. If you are interested, I recommend a lucid, 12-minute podcast on the topic. You can access it without charge, courtesy of  The Guardian newspaper, at the link below.

When we asked you to nominate some intellectual cliches for this series earlier this year, Adam Smith’s “invisible hand” cropped up repeatedly ….

In the third episode of The Big Ideas, Benjamen Walker discusses the meaning and uses of Smith’s concept with philosopher John Gray, academic Marianne Johnson, economist Eamonn Butler and Guardian columnist Polly Toynbee. ….

As we mention in the podcast, Smith himself only used the phrase “invisible hand” sparingly. ….

Benjamin Walker, “The Big Ideas podcast: Adam Smith’s ‘invisible hand’“, The Guardian Comment is Free podcast, 6 October 2011.

Smith did use the term ‘invisible hand’ quite sparingly. It appears only once in each of three published works, for a grand total of three times.

In The History of Astronomy (written before 1758, but published in 1811), Smith writes that there is no need to resort to the supernatural, to “the invisible hand of Jupiter”, to explain natural phenomena:

Fire burns, and water refreshes; heavy bodies descend, and lighter substances fly upwards, by the necessity of their own nature; nor was the invisible hand of Jupiter ever apprehended to be employed in those matters. [Emphasis added.]

The phrase appears a second time in The Theory of Moral Sentiments (1759), in paragraph 10 of the first and only chapter of part IV:

The rich … consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. [Emphasis added.]

His third and last use of the phrase is in book IV, chapter 2, paragraph 9 of The Wealth of Nations (1776):

By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.