Saturday, May 16, 2015


Miriam Cosic, an author and critic, posts (16 May) in The Australian: “David Graeber’s Utopia of Rules tackles bureaucracyHERE 
Consider how radical Adam Smith’s “invisible hand” was in its day.”
Let’s be clear: Adam Smith’s supposed “invisible hand” was certainly neither “radical”, nor widely known in his day beyond it long=standing use by theologians, ‘hand of God’ preachers, and some imaginative authors (Horace, Shakespeare, Defoe, Voltaire, Walpole). Smith’s use (on only two occasions) of the metaphor while he was alive (1723-90). His use was totally ignored by his contemporaries. 
After he died in 1790, it was revealed that Smith had referred to the metaphor for a third time in his unpublished manuscript (“History of Astronomy”), referring to the Roman pagan God, “Jupiter”. Hence no one in “his day” had noticed it. He had written "Astronomy" between 1744-58 and it was first published, posthumously, by his literary executors in 1795. Together, his three uses of the “invisible hand” metaphor were largely ignored in print through to 1875, and, similarly, hardly mentioned in print through to the 1940s. I have produced evidence of an oral tradition at Cambridge (England) of its use at faculty level in mid-19th century (see my chapter in "Propriety and Prosperity: new studies on the philosophy of Adam Smith, eds. D. Hardwick and L. Marsh. "The Invisible Hand Phenomenon in Economics", pp. 198-222. Palgrave-Macmillan, 2014.
I assume Miriam Cosic is back-projecting the supposed “radical use” of Adam Smith’s “invisible hand” in “its day” from its astonishingly wide use nowadays by ideologues (and their critics) since the last half of the 20th and 21st centuries, compared to its near total absense in Smith’s “day”.
Adam Smith’s use of the “invisible hand” had nothing to do with “radical’ (or 'reactionary') politics. It simply metaphorically describes the motives of human actions in two specific cases. First, the agent’s “proud and unfeeling landlords” in agriculturally-based feudal regimes in “Moral Sentiments”) and risk-averse merchants avoiding foriegn trade in “Wealth Of Nations”, which actions could also have unintended consequences that may have beneficial (or non-beneficial) outcomes for their quite different societies.
Since Samuelson’s “Economics: and analytical introduction” (1st edition, 1948, thru to his 19th edition, 2010) Smith’s use of the metaphor has been transformed into the idea of society being guided by a mysterious, even “miraculous”, invisible hand that somehow (intentionally?) brings about public social benefits from the “selfishness” of agents to produce "public benefits". In plain fact, there is no actual “invisible hand”. It was a metaphor for individual motivated actions by agents. It is not a guiding entity of any kind.

Market economies function through VISIBLE prices and cannot function without them.


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