Saturday, August 20, 2016



In recognition of the recent andwelcome trend of accurate references to Adam Smith’s meaning when he used the metaphor of “an invisible hand”, and correct presentations of his ideas, Lost Legacy will post such welcome recognition under the heading:
ROLL OF HONOUR, No. 1, and so on.
There were two such posts recently and their references are reproduced in the new column.
LOONY TUNES (spelt as such to avoid infringing the universally known copyright of the deservedly popular film and media enterprise) will continue as before, though I hope that entries in the new Roll of Honour column will increase in frequency.
Dan Byrnes responds to a question on QUORA . See Dan Byrnes at at: Dan Byrnes Word Factory [ ]
QUORA asks: What are some criticisms of the invisible hand? HERE 
Dan Byrnes, answers:
“My criticism of “the invisible hand” is that it has become something mystical in US politics and right -wing ideologies, and allegedly is far more precise in operation than it was ever, as an idea, intended to suggest. It is after all, merely a metaphor. The idea behind remarks about the “invisible hand” is that markets do tend to be self-organizing, but it is sheer naivete to imagine that this tendency to self-organisation cannot be manipulated for good or ill by parties with various and other sorts of market-exploiting ideas in mind. Just one of the forces meant to distort or redirect “the invisible hand” is, and it is hardly surprising, is advertising.”
Dan Byrnes is absolutely right in his criticism of modern versions of the “invisible hand” and I commend his post to readers (please pass it on).
Andreas OrtmannDavid BaranowskiBenoit Walraevens, joint authors of “Schumpeter’s Assessment of Adam Smith and The Wealth of Nations: Why He Got It Wrong” (UNSW Business School Research Paper No. 2015 ECON 28).
This paper is a most interesting assessment of Schumpeter’s well known critique of Adam Smith’s Wealth of Nations and very personal criticism of Adam Smith. The authors are to be congratulated on their thorough assessment of Schumpeter’s assessment, which also informs readers of the distinctive role of Smith’s analysis of Rhetoric, for which he is less famous - even grossly neglected - Lectures on Rhetoric and Belles Lettres (1762-3) - as I have long suggested on Lost Legacy.
Schumpeter had not read LRBL because it was not available as a version witten down and compliled by two anonymous students who attended Smith’s Lectures delivered in Glasgow in 1762-3. Because Schumpeter was not aware of Smith’s interest in the role of rhetoric in the expostion of ideas he has an excuse for his otherwise ignorant criticism of Adam Smith.
Interestingly, Adam Smith taught rhetoric for longer than any other subject. He was commissioned by Lord Kames and James Oswald (MP) to deliver public lectures for fee-paying attendees, mainly from the general public and from students studying law or religious beliefs at the nearby Edinburgh university, as well as several professors from Scotland’s Universities (Glasgow, Edinburgh, St Andrews and the university college at Aberdeen). Smith’s reputation grew each winter from 1748-52. Reportedly, Smith earned £100 a winter series which was close to the salary of a university professor.
Ortman, Baranowski and Walraevens demonstrate how Smith’s passion for rhetoric as a teaching method was applied throughout Wealth of Nations and remembering that his focus was on persuading government ministers (politicians) and significant others by the perspecuity of his arguments about the dangers of mercantile policies associated with foreign trade - such as the Navigation Acts - that led to European wars, colonial revalries and the inhibition of foreign trade.
The paper is available from:
The Social Science Research Network Electronic Paper Collection:
I strongly advise readers to follow the link and read some truly original scholarship about Adam Smith.
At Last: a paper on the "invisible hand" and Adam Smith that I can agree with and I recommend it to all readers of LOST LEGACY. The paper includes a demolition of Robert Franks fantasies about Charles Darwin.
Drop the authors a line and ask (politely) for a copy.
To summarise it would not do it justice. Hence, I post its location. I recommend that readers follow the links and read it in full:
Smith’s Wedge: The Invisible Mishandling of Context in Robert Frank’s The Darwin Economy By Stephen T. Ziliak and Samuel Barbour, Department of Economics Roosevelt University 430 S. Michigan Ave Chicago, IL 60605 January 29, 2016 Forthcoming, Schmollers Jahrbuch
Try this link sent by the authors for a copy of their paper:
In The Darwin Economy a distinguished behavioral economist, Robert Frank, promises to put Adam Smith’s “invisible hand narrative” into “context”. Neglecting history, empirical evidence, original sources, and a voluminous secondary literature, he fails to deliver. Frank predicts that one hundred years from now professional economists will name not Adam Smith but Charles Darwin as the intellectual founder of their discipline. The reason he gives is “Darwin’s wedge”—a term he coins to emphasize a divergence between individual and group interests which in turn causes wasteful competition and collective loss. He credits Darwin for the insight. We find the very same “wedge” and insight in a book wholly neglected by Frank and most economists after Stigler, namely, Smith’s The Theory of Moral Sentiments. Working with original sources we show that Frank’s view of the invisible hand—and thus of modern economics—is not sustainable. Contextual economics after Schmoller is of course voluminous but it is hardly known by Frank, who is wedded to the axiomatic approach and “no cash on the table” conjecture favored by most neoclassicals. We highlight the problem with evidence on the economics of labor-managed firms and with a revival of a once-famous study by Carleton Parker on large scale farming, unregulated migrant labor, and the Wheatland Hop Field riot of 1913.

Keywords: invisible hand, Schmoller, migrant labor, labor-managed firms, Wheatland JEL Classification: B3, N3, J6, B41, Q10.


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