David Wilson on 'The Invisible hand is Dead! Long Live the Invisible hand!

David S. Wilson posts on EVONOMICS HERE

David Wilson  is SUNY Distinguished Professor of Biology and Anthropology at Binghamton University and Arne Næss Chair in Global Justice and the Environment at the University of Oslo. 

“The Invisible Hand is Dead! Long Live the Invisible Hand! It's time to rethink the foundational economic metaphor”

“In olden days, the death of a king and accession of his successor was announced by the proclamation “The King is Dead! Long Live the King!” I’m here to announce the death and successor to the concept of the Invisible Hand.

As everyone ought to know, the Invisible Hand was Adam Smith’s metaphor for the idea that an economy can run itself without anyone having the interest of the economy in mind. He invoked the metaphor only three times in his voluminous writing, so it does not stand for the full corpus of his thought, but it achieved King-like status with the advent of neoclassical economics, Homo economicus, and all that.

That King richly deserved to die but killing him was not easy. I would like to think that two blows finally did the trick. The first blow was the disastrous outcome of that King’s rule. If you are still in denial after the 2008 economic collapse, the current disintegration of the European Union will bring you to your senses.

The second blow was the collapse of the theoretical edifice that propped up the old King and its replacement by a new edifice based on a combination of evolutionary theory and complexity theory. From the perspective of the new edifice, the idea that the unregulated pursuit of lower-level self-interest robustly benefits the higher-level common good is absurd. The old King was a grotesque emperor without clothes. End of story. Let’s bury him and get on with it.”

“You might think that the old King should be replaced by no King. After all, the metaphor of the invisible hand did not loom very large in Smith’s thought; why should it loom large in ours? It turns out, however, that a robust concept of the invisible hand does emerge from evolutionary and complexity theory, so there is a new King to coronate.

The key to identifying the legitimate concept of the Invisible Hand is to focus on its two central claims: 1) A society functions well; and 2) Members of the society do not necessarily have its welfare in mind. Are there any non-human societies that satisfy these two claims? Many do not. A difficult lesson to learn about nature is that many animal societies are despotic in human terms. These are “life’s a bitch and then you die” societies that persist for millions of years without any invisible hand to save the day.

But some animal societies do satisfy the first claim, such as the fabled bees, ants and termites. Multi-cellular organisms can also be viewed as well-working societies of lower-level units such as organs, cells, and genes. Whenever a non-human society satisfies the first claim of the invisible hand metaphor, then the second claim is satisfied as well, because bees, cells, and genes don’t even have minds in the human sense of the word.”

Comment

I find this essay most interesting. It addresses an area of science with which I am much concerned in my long campaign against the pseudo-science of much of modern economics, of which Lost Legacy has focussed on since 2005. Specifically the awful confusion caused by the ill-founded and fallacious belief in respect of Adam Smith’s use of the metaphor of an invisible hand, which incidentally, David Wilson, correectly notes, in its modern re-incarnation, has nothing at all to do with Adam Smith. {Paul Samuelson has a lot to posthumously apologise for!).

Moreover, modern economics falsely assumes the mantle of being scientific because its precepts are representated by the modern applications of mathematics to an essentially non-mathematical irregularity. People, wrote Adam Smith, are not like wooden pieces on a chess board moved by a player’s hand. They each have a principle of motion of their own:

“The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it.” 

The ‘man of system’ “seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder” (Theory of Moral Sentiments, VI.ii.2.17: pp 233-4). 

I recomend readers to follow the link to David Wilson’s post. I have not commented on his arguments on this occasion from his assertions because I would like to read more before I do. I am also hesitant in brining into the subject anthing that rescues to so-called ‘invisible hand’ in a new guise.