Sunday, October 05, 2014


Michael Hirsh, national editor for Politico Magazine HERE 
Madrick argues that U.S. policymakers remain in the grip of a set of debunked, but somehow still dominant, ideas that are preventing real progress. Among them: Say’s Law, an antiquated early 19th century concept that implies that government deficit spending never works because it crowds out private spending. Policy-makers, especially on the right, also remain paralyzed by a fear of nonexistent inflation if the Fed lowers rates or government spends too much, as well as deference to an “invisible hand” that conservatives believe governs the markets but which even Adam Smith (the phrase’s inventor) didn’t really believe in.

Always a pleasure to see opinion formers like Michael Hirsh on the right track as far as knowlege of the real Adam Smith, born in Kirkcaldy in 1723, is concerned. This contrasts with an entirely mythical Adam Smith born somewhere in the USA in the 20th century.
Some say it was George Stigler’s bold one-liner in 1976 at a conference in Edinburgh, of all places, celebrating the bi-centenary of Wealth Of Nations, announcing to audience that Adam Smith was “alive and well in Chicago” that started the joke.
 Others say it was Paul Samuelson at MIT in 1948, who carelessly commented on an “Adam Smith” impostor whose reputation originated in US academe sometime in the 1930s among students who were not paying sufficient attention to their lecturers (Samuelson was an undergraduate at Chicago in the 1930s).

I say the myth began from among Cambridge (England) Academics in the late 19th century, who melded ‘laissez-faire’ and the ‘invisible hand’ and nursed the mythical Adam Smith to life much like Dracula and which quickly brain-washed US academe from the 1960s and the rest of the world into belief in fantasies, much like the 'blind' crowd cheering the naked Emperor for his clothes.

For an academic analysis of the sad tale see my “The Invisible Hand Phenomenon” essay in a new book, soon to be published in: “Propriety and Prosperity: New Studies on the Philosophy of Adam Smith”ed. Leslie Marsh, Palgrave-Macmillan,  2014).


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