Thursday, October 20, 2005

Correct Use of Smith's Use of Shakespeare's Invisible Hand Metaphor

David James, writing in Australia Business Review Weekly, 20 October 2005, on “The cultural advantage” (‘Changing the company culture is a difficult and often indeterminate exercise, but working on the 'soft' issues can produce hard financial results’) reports on the thoughts of the chief executive of ANZ Banking Group, John McFarlane.

Read his article at:

He concludes his thoughtful piece with, what starts out as a welcome summary of Adam Smith’s views, makes a reasonably correct and proper use (if people must) of Shakespeare's (Macbeth, 3:2) metaphor of the invisible hand (also used once by Adam Smith):

“The tenor of McFarlane's argument resembles that of another Scot, the 18th-century economist Adam Smith, who argued that the proper operation of markets is principally a moral issue, and that many of the more healthy influences in free markets are not a function of the intentions of the individual actors but rather a consequence of the underlying dynamics of the system. When McFarlane talks of the bank's "energy in the right direction", of "momentum" that is "driven down into the organisation", or "stimulating an upward movement", he is looking for the organisational equivalent of Smith's "invisible hand": the hidden influences that shape events for the collective good.”

Congratulations, David James.


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