Sunday, April 13, 2014


Peter Foster’s new book is announced in Canada Free Press (“Because without America There is no free world”) HERE 
Why We Bite the Invisible Hand: The Psychology of Anti-Capitalism
published by Pleasaunce Press, Toronto on 1 May.
In the publisher’s promo we read: 
Hunter Gatherers with IPhones”
In Why We Bite the Invisible Hand, award-winning journalist and author Peter Foster delves into a conundrum: How can we at once live in a world of expanding technological wonders and unprecedented well-being, of improving health and longer lives, and yet hear a constant drumbeat of condemnation of the system that created it?
That system – capitalism – is guided by the “Invisible Hand,” the metaphor for economic markets associated with the great Eighteenth Century Scottish philosopher Adam Smith. The hand guides people to serve others in the pursuit of their own interests, and produces a broader good that, as Smith put it, is “no part of their intention.” Critics however claim that the hand is tainted by greed and exploitation, leads to inequity and dangerous corporate power, and threatens not merely resource depletion but planetary disaster.
Foster, with Adam Smith as his constant reference point, probes misunderstanding, fear and dislike of capitalism – and political exploitation of those feelings—from the dark satanic mills of the Industrial Revolution through to the murky concept of sustainable development.
His journey takes him from New Jersey in the wake of Superstorm Sandy, through Kirkcaldy, the town of Smith’s birth,  Moscow McDonald’s, Karl Marx’s Manchester and Ayn Rand’s Hollywood.
He refutes claims that capitalism’s validity depends on the system being “perfect” or economic actors “rational.” He also notes the key difference between capitalism and capitalists, who are inclined to misunderstand the system as much as anyone.
Corporations, he points out,  can usually only become dangerous through government favour. Moreover, if big business is to be condemned, it should be not for flinty-eyed devotion to profit maximization, but for falling for subversive notions such as corporate social responsibility and sustainable development, and agreeing to beg for “social licence” from radical, unelected environmental non-governmental organizations, ENGOs, whose own political power has soared in the past two decades.
Related to the rise of the ENGOs, Foster deals with one of the biggest and most contentious issues of our time: projected catastrophic man-made climate change. He notes that while this theory is cited as the greatest example in history of “market failure,” it in fact demonstrates how both scientific analysis and economic policy can become perverted once something is framed as a “moral issue,” and thus beyond debate.
Foster’s book is not a paean to greed, selfishness or radical individualism. He believes that the greatest joys in life come from family, friendship and participation in community. What has long fascinated him is the relentless claim that capitalism destroys these aspects of humanity rather than promoting them.
Moreover, he concludes, when you bite the Invisible Hand… it always bites back.”
The first thing I noted in the announcement is its relaxed writing style, full as it is with witty metaphors, similes, allusions, hyperboles, and sharp nuances.  Combined they entice the reader towards the message: I ought to buy the book or at least drop the promo headliner into conversations for social affect: “hunter gatherers with iphones” Hence, my Blog headline above - I bet it grabbed your attention!
But what of the substance of the offering of Peter Foster’s new book, “Why We Bite the Invisible Hand: The Psychology of Anti-Capitalism’?
The promo says it all: “capitalism – is guided by the “Invisible Hand,” the metaphor for economic markets associated with the great Eighteenth Century Scottish philosopher Adam Smith. The hand guides people to serve others in the pursuit of their own interests, and produces a broader good that, as Smith put it, is “no part of their intention.”
There is no “invisible hand” guiding people to serve others. Nor is the invisible hand a metaphor for “people” serving others in pursuit of their own interests”.  In Smith’s writings the metaphor described the action that followed from a person’s motives, which had intended consequences (the immediate purpose motivating the action) that, in turn, sooner or later may have unintended consequences, for good or ill, on the individual or the society of individuals.
There is nothing necessarily benign in the consequences, intended or unintended, that follow from the actions of peoples’ motives.  From the actions of people motivated to smoke cigarettes, the immediate consequences of those addicted to tobacco may be a sensation of relaxing their craving sensations; later they could suffer the unintended consequences of cancers to the body and shorter life-spans.  Society generally may enjoy the beneficial side affects of lower taxation from the tax and duties paid by addicted smokers, net of the increased health spending occasioned by treating smokers in hospitals (for which health employees and medical businesses may benefit), though the diversion of funds to treat them may cause reduced attntion to other medical problems of non-smokers . Not to mention the consequential personal costs of deeply felt grief at the early death of one’s children, spouses, or parents and grandparents, and dear friends.
In Smith’s first published example in his Theory of Moral Sentiments (1759) the “proud and unfeeling” landlord was motivated to supply his slaves, serfs, or labourers from the produce they laboured upon in the landlord’s fields – who couldn’t do otherwise, for without food the labourers could not work.  Likewise, the labourers in slavery, serfdom or free, laboured in the landlord’s fields in order to feed themselves and their families, for without food they could not live. 
Smith made the further observation that beyond the intended consequences of the motivated actions of both the landlords and their labourers there was the intended consequences of the propagation of the species, one of the ends of ‘nature’, despite the death rates of under-fed labourers, sick wives and infants, plus the social ‘accidents’ of life in the feudal centuries.
Similarly, in Smith’s second example of the use of the metaphor on “an invisible hand” in Wealth Of Nations (1776), where he described the motivations of a merchant who, because he felt foreign trade had too many risks and because he therefore avoided sending his capital abroad, he preferred to act by investing his capital at his perceived lower risk in the domestic economy.  Again a merchant’s motives of insecurity led him to his intended actions (safer to invest locally) and in doing so he necessarily added to domestic investment.  His motivations (lower the risks of investment) led to his intended actions (invest locally) and in consequence his actions had intended consequences.  By adding to domestic investment the insecure merchant also added to domestic “revenue and employment”, which were public benefits in what today we would call higher GDP.
Since Smith’s time his metaphor for the above examples, “an invisible hand” has become a virtual religion because it has become a mythical allusion way beyond anything contemplated by Smith’s innocent use of metaphor.  Briefly, there is no actual invisible hand operating in “markets”. 
Metaphors “describe in a more striking and interesting manner” what they are describing. We know that this is the case with Smith’s use of the “invisible hand” metaphor because the description of the role of metaphors in the English language  comes from page 29 of Adam Smith’s “Lectures on Rhetoric and Belles Lettres” that he delivered at Glasgow University in 1762-3. Moreover his lecture corresponds to the definitions in the Oxford English Dictionary (1973).
In Smith’s case the “invisible hand” metaphor described the motivated consequences of the actions of “unfeeling’ landlords and “risk averse” merchants whose initial motivated actions had unintentional consequences that happened in their case to be on balance beneficial.  Of course, a moments reflection will show that the initial motivations for an action can lead to unintended consequences detrimental to the initial actor and, also, detrimental to others, and in some cases, detrimental to society at large.
Believers in the mythical interpretation of Smith’s use of the metaphor of “an invisible hand” – used only three times in all of Smith’s Works or Correspondence – seldom, if ever, consider the possible detrimental personal and social consequences of motivated actions in general.  A short acquaintance of everyday motivated actions would inform Believers that their evident trust that there is “an invisible hand” actually operating mysteriously – even miraculously – in markets to ensure harmony and beneficial outcomes everywhere for everybody is ridiculous.  Adam Smith never claimed there was such an entity.
Peter Foster play a different tune. He writes well and no doubt with the best of intentions in his polemical defence of his views on capitalism – of which this post is not a direct criticism - but in doing so he weakens his case by alluding to the myths of the invented “invisible hand” of the 20th century and he libels the actual meanings of Smith’s innocent use of a metaphor in the 18th century.
By the way: how do you “bite” something that is invisible and, anyway, is only a metaphor?


Blogger airth10 said...

I was wondering if 'hunter and gatherers' had an invisible hand behind their activities, a bias that directed their behaviour.

12:26 pm  
Blogger Gavin Kennedy said...

I applaud your sense of humour!

5:58 am  
Blogger Unknown said...

Wow, I have to say you yourself do not understand how to properly fit Adam Smith's invisible hand in the modern political economy. If as you say Smith was concerned not with individualism but the proper management of the commonwealth then with the rapid industrialization there can only ever be EXTREMELY regulated and rationed any and all modern industries & consumer consumption. I mean you have to literally state the maximum any customer can have of any specific good, down to #2 pencils and louffa scrubs.

"By the way: how do you “bite” something that is invisible and, anyway, is only a metaphor?"

Metaphorically, obviously. You need to quit with the faux outrage over the invisible hand metaphor. You come off as a crusty partisan deliberately making mountains over molehills. Adam Smith's perspective fully eviscerates the argument for privately managed legal extensions of the state we call corporations. You do realize that proper understanding of the invisible hand metaphor actually BETTER supports the arguments of those you bemoan its use?

10:29 pm  

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