Monday, September 18, 2006

Ever Wondered of What an Invisible hand Consists?

A Union view of the price mechanism and the ubiquitous ‘invisible hand’ of the market contrasts with my other piece today stating a rightwing view of markets and environmentalism (from

“Wouldn’t a Bush administration powerful enough to control gas prices — a power that has escaped every administration before it — be powerful enough to clean up New Orleans in 12 months?

Some people believe that everything must be controlled by some powerful hand. They’re right. But it is not the hand of government or big corporations. It is what Adam Smith called “the invisible hand” — the end result of millions of individual choices working independently in the marketplace.”

Gas prices are set by ‘the market’ (preferably: ‘markets’) and they are “he end result of millions of individual choices working independently”. True, but no ‘invisible hand’ is involved.

And Smith did not refer to ‘the’ invisible hand; it was ‘an invisible hand’, and he was not referring to markets but to the consequences of individual unintentional actions, in the sole case in Wealth of Nations he spoke about individual fears of the security of their capital causing them to prefer to invest locally rather than out of their sight.

This leads to the usually unasked questions: Of what does an invisible hand consist? Why is such a metaphor considered to be necessary to explain markets? Why do people believe Smith used the metaphor in the manner they do, but which he did not?


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