ADAM SMITH IS INNOCENT!
Javier E. David posts ( July) on CNBC HERE
“Economy needs 'fundamental reorientation' using a 'common good' approach”
“The "invisible hand" of the free markets popularized by Adam Smith in his seminal tome "An Inquiry into the Nature and Causes of the Wealth of Nations" has become antiquated, Felber argued, and simply "doesn't work. The Common Good balance sheet is a way to see that Adam Smith's dream comes true," he added.”
Javier David is earnestly keen and driven by good intentions. His proposed scheme has merit (as long as it does not become a state bureaucracy simply adding to costly overheads, inspectors, office staff and marketing, and the usual controversies).
I am more concerned that Javier David drags into his case an innocent man, namely Adam Smith, who did NOT “popularise” the … "invisible hand" of free markets … in his seminal tome ”. This is such a travesty of the truth that my flabber is truly gasted!
The historical fact remains true that Smith’s only mention of “an invisible hand” was totally ignored when Wealth of Nations was published in 1776 and through all six editions of it while Smith was alive (he died in 1790). Apart from J. J. Rousseau, who mentioned it once, somewhat flippantly, and Thomas Chalmers, a charasmatic Scottish Presbyterian Church Minister, in 1836. This record of two is hardly evidence of Smith ‘popularising’ the ‘Invisible hand’ - in fact he never mentioned it aside of his single use in Wealth of Nations and his earlier single use in his Theory of Moral Sentiments (1759). (Yes, I know he referred to the “invisible hand of Jupiter’ in an essay on a pagan god who fired thunderbolts at enemies of Rome, published posthumously in 1795).
So where did Javier David get this ‘popularisation’ notion from? The answer is clear. It came from modern economists, who picked it up from Paul Samuelson’s popular textbook, Economics (1948), with its circa 5 million sales to 2010.
The modern interpretation of Smith’s use of a popular theological metaphor, is way beyond anything Smith articulated while he was alive. That these modern and invented notions ‘don’t work’ has nothing to do with Adam Smith’s more modest meaning.