Monday, December 28, 2009

A New Myth for the Myth of An Invisible Hand

Steve” posts (27 December) at Radimisto HERE:


"In his biography of Adam Smith, Ian Simpson Ross attributes Smith's belief in an invisible hand that makes free markets work as if there were a Free Market Fairy derives from his readings in Stoic philosophy. I didn't realize the Stoics had anything that could justify this, so I went to the online Stanford Enccyclopedia of Philosophy and read the entry on Epictetus and found this:
Equally important for him is that human rationality has as its setting a maximally rational universe. His confidence in the fundamental orderliness of all things is expressed in frequent references to Zeus or “the god” as the designer and administrator of the universe.

This also explains why Smith also used the "invisible hand" argument decades before he wrote the Wealth of Nations.

1The life of Adam Smith / Ian Simpson Ross.
Oxford : Clarendon Press ; New York : Oxford University Press, 1995

This looked promising, at least in the title.

Ian Ross’s biography of Adam Smith is about as definitive as can be got. In fact, a second edition is in press at the moment and should be published in 2010.

However, a lot of water has gone under the bridge since its first edition in 1995 and I look forward to reading his treatment of aspects of Smith’s writings, including his current views on the significance for Smith of his use of the invisible-hand metaphor.

I had several discussions with Ian Ross at academic conferences at Balliol College, Oxford and in Edinburgh (the latter including a memorable visit together to Panmure House, Edinburgh, Smith’s last residence from 1778-90; now owned by Edinburgh Business School, Heriot-Watt University).

Ian has also read my paper, “Adam Smith and the Invisible Hand Myth”, in the May 2009 edition of Economic Journal Watch (ejw_wat_may09_kennedy.pdf) and while keeping his proper, because neutral, distance as Smith’s biographer, he made some useful comments in subsequent correspondence. I do not think you can with justics accuse Ian Ross (or indeed Adam Smith) of believing in a “Free Market Fairy”.

Smith as a classical scholar, in both Moral Sentiments and Wealth Of Nations, was more than familiar with stoic philosophy – he taught philosophy after all – but I find no connection between stoic philosophy and his two uses of the invisible-hand metaphor, once only in each of his two books (and once only in an early juvenile essay on The History of Astronomy, began in 1744, which had nothing to do with economics, or stoic philosophy).

Indeed, I would go so far as to say that the proponents of the invisible-hand metaphor, who give it great significance (especially since the 1940s, but rarely before then, right back to the 18th century) always, almost without exception – I may have missed one or two – never discuss in any detail the exact contexts in which Smith used the metaphor. The attribute the metaphor to Smith's theory of prices, of markets, of supply and demand, and growth, all anlaysed in detial in Books I and II of Wealth Of Nations without mentioning the metaphor; yet his only use of it is once in Book IV.

They de-contextualise and introduce separate philosophical references, and quote what others – never Smith – said about loosely related issues, as if the views of others are important for deciding on issues of the significance of his rhetoric for Smith.

For instance, I have not yet seen any discussion by believers in the mythology of the invisible-hand which analyses the paragraphs preceding the use of the metaphor, or the exact contexts (quite often they get the meaning of the ‘invisible hand of Jupiter’, the Roman god in his Astronomy essay, quite wrong), which I find significant. If you do not discuss – virtually hide- the context, you mislead yourself and your readers.

As for Smith on religion, see my 2009 paper, ‘The Hidden Adam Smith in his Alleged Theology’ (available on request from: gavin AT negweb dOt com).

Steve’s theory, sadly, like his title, is empty of what it promised.

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Blogger Tom Hickey said...

Weak argument for Stoic influence, I'd say. Much more cogent is that Smith was influenced by Deism, which flowered in Britain around 1690-1740, so Smith would have been well aware of it. This places the influence much closer to Smith and the cultural context in which he was writing. Many intellectuals of the time would likely have recognized this allusion, I suspect.

12:06 am  
Blogger Gavin Kennedy said...

Hi Tom
Smith appears at various times in Moral Sentiments to be influenced by Stoicism (he was a classical scholar and professor, and familiar with such ideas).

Equally arguable, he appears to be influenced by Deism, such as you suggest.

Again we can say the same thing about Providentialism, as well as revealed religion, and, I think, scepticism, close to Hume's views.

In fact, his religious ideas are a jumble.

I make these points and the reasons for them in my paper, "The Hidden Adam Smith in his Theology", 2009. I hope to have it available on the web soon, but meanwhile, I can send it to you via my address in the text.

Many intellectuals would certainly have recognised the metaphor from its wide use at the time.

Best regards


8:35 am  
Blogger Tom Hickey said...

I think that what we are dealing with here is the Greek logos/kosmos doctrine that was present from pre-Socratic times. Heraclitus is familiar with it. The Stoics, of course, made it a cornerstone of their philosophy, but it underlies the Platonism and Aristotelianism, and it was imported into Christian theology, probably due to the influence of Philo, who compares the creative "word" of God in Genesis to the logos of Greek philosophy. Augustine, for example, was hugely influential in the development of subsequent Christian thought, and Augustine equated the Plotinian logos as universal reason with Christ IAW the Gospel according to John. For Augustine, the Word is not only the foundation and light of the world, He is within each of us. Augustine was enormously influential not only for Catholic theology, but also Protestant through Martin Luther.

The logos/kosmos survives as the basis of Western rationalism, and it was instrumental in the development of modern science. Historians do see the the Stoics as influencing the development of science, especially their contributions to logic. Greek "logos" is rendered "ratio" in Latin and "reason" in English. I suspect that Smith as an educated person of his time would have been well aware of the Greek sources, the subsequent Christian adoption, and its contemporary manifestations, e.g., the intellectual (rational) foundation of Deism.

But would think that the use of metaphors like "the invisible hand" would have been contemporary for Smith and his compatriots who used them, rather than specific allusions to Greek origins or matters of direct influence. I think that quite specific evidence would have to be produced to make that case. So I don't know that saying that Smith was influenced by the Stoics adds all that much to knowledge about Smith or other thinkers of his time who were familiar with the Greeks but writing in terms of contemporary concerns.

As Whitehead observed, Western philosophy is a footnote to Plato. That doesn't mean that Western philosophers are all directly influenced by Plato (and early Greek thought) other than very generally. But as a general observation it has validity. So I suspect that the invisible hand metaphor is likely related to the concept of logos as a key thread of Western thought, even if not consciously and intentionally — which may difficult to establish based on evidence. But maybe not.

7:24 pm  
Blogger Gavin Kennedy said...

Thanks Tom

At conferences oon Smith and in books written about him, many authors enter a distracting dialogue about Smith's roots on classical philosophy, much of which is confusing across different authors, rather than focus on Smith's ideas.

Smith read Greek and Latin - the latter was the speech mode of lectures in Scottish Universities (he delivered his 'thesis' on the Origins of Ideas in Latin before the Glasgow faculty to qualify for appointment as professor in January 1751).

D.D Raphael and Macfie in their introduction to Moral Sentiments and discuss Stoic influence and Smith's explicit sections on it, which clarifies much for me.


8:42 am  

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