Saturday, August 25, 2012

The Myth of Adam Smith's "Infamous Hand"

“As so many people continue to blindly pursue their own self-interests, I start to wonder if Adam Smith’s infamous ‘Invisible Hand’ continues to improve the living standards and benefits for all members of society? Who is actually looking out for the ‘common wealth’ these days?
“I wish people who robotically and extravagantly praise unfettered capitalism would spend some time reading The Theory of Moral Sentiments by Adam Smith (of which the term ‘invisible hand’ is first used). By doing so they would gain insight and understanding of his intent (to be decided by themselves of course) for those members within a community who had excess. They were obligated by their humanity and moral compass to distribute their unnecessary excess, which in turn would benefit all members of society.
“The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.”
The quotation is from Moral Sentiments (1759) (TMS IV.1.10:184).  Keith has truncated it somewhat before and after the piece he quotes, and neither does he explain to what Adam Smith was referring, which may give the casual reader a misleading impression and prevent her “gain[ing] insight and understanding of his intent (to be decided by themselves of course) for those members within a community who had excess’.
I applaud Keith’s broad intention, of course, but we must be accurate too.  Smith developed his parable of the “poor man’s son, whom heaven in its anger has visited with ambition” to emulate the rich and the awesome consequences for him.  The desire for emulation was a curse, for which his body and spirit paid in due course.   Such emulation was a “deception”, but it was “this deception which rouses and keeps in motion the industry of mankind” (183).  He adds that the earth by mankind’s labour has “redoubled her natural fertility” and “maintains a greater number of inhabitants”.
Note that this time period, that we know now since agriculture appeared about 11,000 years ago, near the modern Syria-Turkey border, has covered a multitude of regimes, all of them with a “rich” leading segment and an overwhelmingly larger labouring poor segment.  This is where the “proud and unfeeling landlord views his extensive fields, and without a thought for the wants of his brethren, in imagination consumes himself the whole harvest that grows upon them”. 
Now it is “the rest [which] he is obliged to distribute among” the “thousands whom he employs”. And this is the key sentence to what follows, which Keith Armstrong quotes in full and draws misleading impressions.  Why is the landlord “obliged” and why have all his predecessor rulers of mankind been so “obliged” too, right through to the 18th century?
Adam Smith uses the metaphor of “an invisible hand” to describe its object “in a more striking and interesting manner” (See: Adam Smith on the role of metaphors in his “Lectures on Rhetoric and Belles Lettres", ([1762], p. 29), specifically, in this case to describe what was beyond doubt, a necessary object of this metaphor, namely his total dependence upon his labourers, servants, overseers and retainers who labour in his fields, and palaces.    The dependence was mutual: the “thousands whom he employed” had to be fed from the product of his fields, because without food – even for a few weeks – they could not labour, and conversely, without their labour there could be no “heap” of anything for anyone to draw from: ‘no labour, no food; no food, no labour”.  That necessity was what "led" him; not an actual "invisible hand" - metaphors do not exist, they are not alive and neither do they have a "conscience"!
Smith also specifies the “necessaries of life”, which were part of the annual produce of the “necessaries and conveniences” and “amusements (luxuries) of life (Wealth Of Nations).  By definition, human kind had managed to consume the “necessaries” (food, primarily, but also shelter and other basic utilities) since their ancestors were in the forests.  Those necessaries were basic, absolutely so in times of dearth.   No “proud and unfeeling landlords” shared the “conveniences” of life with the “thousands whom they employed”, except perhaps occasional cast off with family favourites, and certainly no “amusements” – their wife’s luxury cloths, trinkets, and such like.
The basic diet of necessities was more or less what their ancestors had drawn in the forests.  The growth of “wealth”, miniscule as it may have been compared to the average possessions of even the poorer in Europe (post war) and the USA today, were not “shared” with the labouring poor, as can still be seen in large swathes of the world today.  Keith may be drawing erroneous conclusions from comparing the alleged “humanity” of Smith’s “proud and unfeeling landlords” as being somehow more “humane” than what he calls today’s ‘top 1 per cent’.   Scale wise, it was more of the same, only the size of the wealth baskets have changed, I suggest.
Incidentally, I am not known for “robotically and extravagantly prais[ing] unfettered capitalism”, and I have spent a number of years “ reading and studying The Theory of Moral Sentiments, and the rest of Adam Smith’s Works.


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