Friday, August 05, 2005

A Rare Error of Fact in The Economist

From an email promoting The Economist (I already subscribe and have for many years), I found this gem and it prompted the following letter to the Editor.

The Editor
The Economist:
From, of all sources, The Economist:

“Wilson's outlook was, therefore, moral, even civilising, but not moralistic. He believed "that reason is given to us to sit in judgment over the dictates of our feelings." Reason convinced him in particular that Adam Smith was right, that through its invisible hand the market benefited profit-seeking individuals (of whom he was one) and society alike. He was himself a manufacturer and ... insisted that all the arguments and propositions put forward in his paper should be subjected to the test of facts. That was why it was called The Economist.”

Oh dear! The Economist commits the ‘invisible hand’ fallacy (that it was about markets, when in fact it was about human motivation having unforeseen consequences).

See “Theory of Moral Sentiments”, page 184, and “Wealth of Nations”, page 456, (Smith’s other reference is in his short essay, “History of Astronomy, page 49, where it is about pagan superstition, not markets). [All references are from the Glasgow Edition of Smith's Works and Correspondence, OUP.]

That a market would always ‘benefit’ both any individual seeking profits and society as a whole on all or most occasions is far too strong a conclusion to draw from Smith’s use of the invisible hand metaphor referring to another context.. He gives many instances where profit-seeking individuals cause dis-benefits to society (e.g., in his critique of mercantile policies and daily business practices).

Given the proclivity of ‘merchants and manufacturers’ to seek profits from monopolies, restrictive practices, anti-competitive actions against outsiders and overseas suppliers, a proclivity that Adam Smith mentions time and time again throughout “Wealth of Nations”, I cannot see how the copywriter can make the invisible hand false statement in the same paragraph as he or she claims that James Wilson sought always the ‘test of facts’.

The copywriter offends Wilson’s rule about ‘facts’, and Adam Smith’s meaning. But 'to err is human, to forgive is divine'.


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