Sunday, February 28, 2016


Dave Begel, contributing writer, reviews a play, ”The Invisible Hand" at The Rep which is described as an unflinching and unique look at the influence of capitalism. (27 February) by Pulitzer Prize playwright, Ayad Akhtar, HERE 
A chilling look at the consumption of capitalism a thrill at The Rep.”
“The title Akhtar chose is from the "Wealth of Nations" written by Adam Smith and published in 1776. The concept of the invisible hand is a simple one as explained on Investopedia.
"Smith used the metaphor of the invisible hand to refer to the guidance and benefit society receives when individuals act in their own self-interest when trying to make money. According to Smith, when consumers are left to freely choose what they want to buy, and businesses are left to freely decide what they want to sell, the self-interest of both will lead to decisions that result in good prices and the right products in the economy and marketplace. As a result, Smith argued that no government intervention is needed. We simply have the invisible hand of economic self-interest to guide us.”
The problem with Ayad Akhtar’s theme for his play is that it is based on and albeit common fallacy, not of Adam Smith’s, but of the modern 20th-century economists who misinterpreted Smith’s correct use of metaphors in what he decribed as his “perspicuous writing”.  Among the offenders there was Paul Samuelson from 1948 onwards (and, later, several other Nobel Prize winners) who invented a narrative, partly in celebration of booming modern US capitalism and its political celebrations, when flushed with victory over Nazi Germany and Imperial Japan, apparent amidst the post-war economic boom that they believed heralded the victory of capitalist economic policies over the failures of rigid state-run Soviet socialism.
Investipedia’s account is quite spurious.  
Smith’s Wealth of Nations is full of detailed criticism of the actual behaviours of “merchants and manufacturers”. He did not enunciate such a role for the “inivsible hand” metaphor, and he definitely saw a role for government intervention by regulations to protect consumers and the population from misguided citizens and governments in an economy, though nothing like on the scale of intervention common today and certainly he was highly critical of government sponsorship of “mercantile political economy” as operated in 18th-century Britain.
Smith did not describe a ‘perfectly competitive’ economy nor did he suggest we could do without government interventions (“party walls” in buildings to prevent the spread of fires; actions to mitigate the spread of of “noxious diseases”; sponsorship of school education in “every parish”; construction of roads; public cleansing of towns; light houses for navigation; and many other interventions.

The “invisible hand” metaphor was not about the sufficiency of “economic self-interest” “to guide us”. That is a modern construction and not Adam Smith’s.


Blogger L. Burke said...

Hello. Just discovered your wonderful blog. How awesome of you to be so faithfully trying to preserve and extend the remarkable legacy of Adam Smith, whose richness and subtlety and usefulness is so frequently overlooked, oversimplified, distorted. Adam Smith is a key player in my multi-disciplinary endeavours of economics, public policy, literature, philosophy, religion, culture. I will be in Edinburgh (from Canada) for much of the month of May 2016 doing some research and writing. Might it be at all possible to have your tour of Adam Smith sites/significant locations, which sounds marvellous? L. Burke.

4:54 pm  
Blogger L. Burke said...

Hello. I just discovered your wonderful blog. How awesome of you to so faithfully seek to interpret and extend the legacy of Adam Smith who is so frequently mis-understood, mis-quoted, over-simplified, blamed for all sorts of ills, whilst the richness and subtlety of his thought continues to be so stimulating and useful. Even as subsequent layers of time and history add their own new elements. Adam Smith plays an important role in my multi-disciplinary endeavours in economics/public policy/philosophy/religion/culture, although I have not yet come to know his work as well as I would like. I will be in Edinburgh (from Canada) for much of May 2016. Might it be possible for me to do your tour of Adam Smith sites/significant locations, which sounds marvellous? L. Burke.

5:05 pm  

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