Friday, March 07, 2008

'Holey Moley' and Myth of the Invisible Hand

An academic spat that reveals a great deal about the state of the discipline was provoked by an announcement from the European Association for Evolutionary Political Economy (EAEPE) about its 2008 Conference(6-8 November) in Rome, Italy, on ‘Institutional History of Economics Research Area’. It stems from the innocuous ‘CALL FOR PAPERS’.

Professor Pat Gunning, Professor of Economics/ College of Business
Feng Chia University, Taiwan, R.O.C., opines the view:

Holy moley!!

Out go the invisible hand comparative advantage, demand and supply, and the quantity theory of money. How can these perspectives on the history of economics be adopted without destroying the subject matter? Have these people gone bonkers?

"The inquiry seeks to contribute not only to history of economics but also to economics - instead of an orthodox outlook that ignores the possibility of such cross-fertilization."

Fat chance, it seems to me.

Pat Gunning’

I do not have an enough information to offer much between Professor Gunning and the European Association for Evolutionary Political Economy (EAEPE), though at a glance I would like to attend its conference out of interest because social evolutionary change characterizes much of what Adam Smith was about in his work.

However, I do have fairly strong views on the use of the metaphor of the ‘invisible hand’, as readers of Lost Legacy will recognize. Professor Gunning appears upset that the invisible hand is not included (though in the official ‘call for papers’ I did not notice that exclusion immediately).

I hope that we may reach a situation where the misuse, misattribution and misleading promotion of the metaphor is sidelined in economics at an early date. Failing that goal, I hope that its automatic tagging as an idea of Adam Smith’s is at least neutralized in the near future, which presently gives a respectable cover for modern economists to accord it an authority that it does not deserve, without realizing how ridiculous they make themselves amidst their insistence of their claims to the status of a science.

Nobody has yet accounted for the invisible hand in their use of it in markets, nor how it is alleged to operate as a disembodied body part, nor even what it adds to the theory of markets.

Adam Smith knew better than to make such a claim for the metaphor, which he used to a) describe as ‘pusillanimous superstition’ by pagan savages (History of Astronomy); b) to give literary flair to the behaviour of rich landlords feeding the ‘thousands they employed’ and their families (they could do no other and survive themselves) (Moral Sentiments), and c) to refer to the risk-avoidance by domestic merchants (Wealth Of Nations).

In none of the only three cases in which he used the metaphor of the invisible hand did he include its use in his theory of markets.

If Professor Gunning thinks that he did, he may point to where in his Works he did so; if he thinks the modern 20th-century interpretations are somehow Smithian, he is greatly mistaken. Perhaps, a visit by him to the European Association for Evolutionary Political Economy (EAEPE) conference may be useful. He could offer a paper on: ‘The Surreptitious Evolution of the Invisible Hand Metaphor into a Theory’. I for one would attend the conference just to hear that alone.


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