CLOSER BUT NOT YET RIGHT

Jason  (PolicyAnalyst at Center for Educational Freedom) posts, 24 June, HERE on “CATO on Liberty”

‘Educational Choice: Getting It Right”

“Of course, there’s nothing “magic” about the “invisible hand” of the market – it’s just a metaphor Adam Smith used to describe the process of spontaneous order, by which the voluntary actions of disparate individuals organically form a system that is the result of human action, but not human design.”

Comment

Jason is close and getting there as he nears the true meaning of Smith’s use the “invisible” hand” metaphor.

What is missing is recognition that the “voluntary human actions of disparate individuals” that  “organically form a system that is the result of human action, but not human design” are inclusive of both beneficial and non-beneficial consequences that may be intended or unintended by the human agents (example: ‘the road to Hell is paved with good intentions”).

 Adam Smith clearly was aware of the implications inclusive of this distinction. He both praised and deprecated the motivated human actions of individuals. In his two examples of his use of the metaphoric ‘invisible hand” in TMS (1759) and WN (1776) he referred to beneficial consequences (the “propagation of the species” (TMS) and “adding to domestic revenue and employment” (WN).

Some motivated actions have detrimental consequences, such as in pollution, tariffs, prohibtions, sanctions, ‘tragedy of the commons’, dynastic and religious wars, and restrictive  practices. He critiques some of the consequences of the behaviours of “merchants and manufacturers”, and of state governments and the “rulers of mankind”.

The “process of spontaneous order” should be used sparingly otherwise Jason Bedrick introduces what he correctly denies in his clear statement that “there’s nothing ‘magic’ about the ‘invisible hand’ of the market” by slipping into his assertion something that would indeed be “magic” if it was described as “spontaneous order”. 

Moreover, the “invisible hand” metaphor was not solely about spontaneous order applied only to markets.  Smith’s reference to the behaviours of “landlords” in TMS, described by “an invisisble hand” applied long before “markets” appeared and also, probably. long before the “proud and unfeeling landlord” appeared in pre-history.