Friday, September 09, 2011

Gross and Imaginative Exageration

Christopher Chantril regularly writes in American Thinker (HERE):

Invisible Hand vs. Clenched Fist”

“It's a choice that goes back 200 years, to when Adam Smith first proposed that the modern economy seemed to work like an "invisible hand" to regulate selfish behavior into socially beneficial results. We think Smith hit on something new, but he didn't. We humans do what every social animal does: help the world by helping ourselves. But it wasn't long before a rival narrative appeared -- that capitalism was a savage beast laying waste to everything it its path. It would take the clenched fist of the workers, backed up by the intelligence of an educated elite, to prevent this monster from immiserating everyone in its path, from workers to the middle class.

Ever since, the choice for moderns has been this. Do you believe in the Invisible Hand or the Clenched Fist? I'd say the choice is obvious. The Clenched Fist has failed every time it's been tried, from the French Revolution to the Bolshevik Revolution, from the New Deal to the Obama stimulus.”

I have no comments on the merits of Obama’s stimulus proposals (Lost Legacy does not comment on the politics of other countries in which I do not vote).

Christopher’s article is fairly typical of its genre – the wholesale myth of Adam Smith’s “invisible hand”, invented and perpetuated by US academe from the 1940s as part of the successful Cold War struggle against the influence of Soviet 5-year Planning propaganda. There had been an oral tradition about Adam Smith’s invisible hand metaphor from the 1920s, led by A. C. Pigou from Cambridge, England, and spread on a larger-scale by the same tradition at Chicago, USA, especially when Paul Samuelson (ex-Chicago, MIT) published his popular textbook, 5 million sales in 19 editions from 1948; his readers (6-8 million) spread all over the world. The myth is now ubiquitous in media, politics, government ministries and popular memory.

Christopher subscribes to the myth and thereby perpetuates it. Adam Smith never “proposed that the modern economy seemed to work like an 'invisible hand' to regulate selfish behavior into socially beneficial results”.

Christopher’s error is both elementary and profound. To write: “like an "invisible hand" turns the metaphor into a simile. Smith never used the “invisible hand’ as a simile, for him it was a metaphor, thereby quite different. (If you are not sure of the difference, consult a dictionary; for Smith’s deliberate meaning in using a metaphor, see his ‘Lectures in Rhetoric and Belles Letter” [1763] 1983, p 29).

Smith did not write about the IH “regulat[ing] selfish behavior into socially beneficial results”. His ‘Theory of Moral Sentiments (1759) has quite a lot to say about ‘selfishness’, none of it condoning it. The word ‘selfish’ was inserted into Paul Samuelson’s account of Smith’s use of IH and is pure invention. Moreover, Smith reference to ‘public good’ referred to the more acceptable, though narrow, point that the investment of capital in ‘domestic industry’, instead of sending it abroad at greater risk, added to “annual revenue and employment” (such as the ‘whole is the sum of its individual parts’), and this Smith regarded as a public good.

As for Christopher’s literary allusion to a “Clenched Fist”, I won’t follow that irrelevancy and grant it even negative existence. Smith lived in a mercantile state, noted for its domestic protectionism against domestic competition at every level (The Guilds, Apprentices Acts, Settlement Acts, Anti-labour Combination Acts, local Magistrates setting local wages, Primogeniture and Entail Laws) and all bolstered by national protectionism against foreign competition through tariffs and prohibitions, policed by the Navigation Acts. Britain was not a competitive environment at all.

The rest is sheer hyperbole.

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