Wednesday, June 02, 2010

On the Genesis of the Myth of the Invisible Hand, no. 10

H. A. Silverman, [1922], 5th: 1928; 11th: 1940; 16th 1964. The Substance of Economics: for the student and the general reader, London: Pitman & Sons Ltd.

Herbert Albert Silverman (1896-), a lecturer in economics to the University of Birmingham and for the Workers Educational Association in the 1920s and the 1930s, wrote several basic business, economics, industrial organisation and taxation textbooks in the 20th century.

The interesting aspect of Silverman’s work for Lost Legacy is that in the 1928 edition the sole reference to Adam Smith in the main text is in respect of a discussion on the Labour Theory of Value, which reflected the interest of his likely readers (not your typical middle-class university undergraduates in the 1920s; more the educated workers and clerical students seeking their education part-time in Extra-Mural Classes offered by universities and ‘technical colleges’. From the trade unions and the ‘new’ Labour Party the Marxist challenge to capitalist economics influenced the choice of syllabi.

However, the 1928 edition of Silverman contained an Appendix, ‘The Development of Economic Thought’ (pp 321-36), which under the sub-heading of ‘The Modern Period’ has a reference to: Adam Smith and the ‘invisible-hand’:

In order to get a proper view of Adam Smith’s teaching, it is necessary to take his other writings into account. In the “Theory of Moral Sentiments” (1759), he dealt with social philosophy ad general conduct. In the work upon which he was engaged when he died, the treated law and politics. The three together demonstrated from various aspects his belief in the “invisible hand” which controlled man’s actions in this world. But his successors severed the practical conclusions from the broader and deeper context, and converted the new philosophy into a doctrine of material individualism. ….

… Nevertheless his work marks the beginning of a new period in the economic thought. Some of the abuses that were committed in the name of the new freedom of action (such as the refusal at first to introduce factory legislation, the repression of labour organisations. Etc.) were due, apart from private motives, to the interpretation that innumerable followers put upon his writings rather than the views of Adam Smith himself (326-27)


We may deduce three things from Silverman’s paragraphs in the Appendix:

First, he held to a theological interpretation of the “Invisible hand” (not uncommon at the time – see also Alexander Gray, History of Economic Doctrine, 1931).

Second, Silverman was aware, and probably read, the 1896 volume edited by Edwin Cannan of the student notes of Adam Smith’s Lectures on Jurisprudence (known as ‘LJ(B)’ in the Glasgow Edition, 1978), which Cannan was offered, fortuitously via an Oxford solicitor. Another version was uncovered in Aberdeen in 1958 (now known as LJ(A)).

Thirdly, Silverman was aware of the differences between Adam Smith’s moral philosophy and his political economy, and the interpretations placed on them by the 19th century epigones (‘laissez-faire’, night-watchman state, and such like), a slant that would appeal to his constituency of working men and women.

In the 16th edition of Silverman’s text (1964), there has been much new writing, as well as various excisions. The reference to the invisible hand is still present (p 199) but the reference to the 19th-century misinterpretation of Smith by economists is absent. By then Silverman would have been 68.

This is only the fourth reference I have found to the Invisible Hand from the 1920s and 30s, which underlines its relative scarcity prior to the 1950s (unless Lost Legacy readers know better…).

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