Tuesday, December 08, 2015


Karl Rove, described as a “Republican Strategist”, (6 September) offers in The Week his 6 favourite books, of which no.3 is one of Adam Smith’s HERE 
The Theory of Moral Sentiments by Adam Smith (Liberty Fund, $14.50). Nearly two decades before the publication of The Wealth of Nations in 1776, Smith examined how people seek to live lives of virtue by attending to their own moral urges. This book's attempt to develop a science of morals deeply informed Smith's later work on the invisible hand that powers market economies.”
Whilst applauding Karl’s choice of Smith’s Moral Sentiments (1759), I am bound to carp at Karl’s assertion that TMS “deeply informed Smith's later work on the invisible hand that powers market economies.
How a major treatise on moral philosophy deeply informed Smith’s use of a single metaphor in a 2-volume book, I am at a loss to understand or explain to readers, especially as Karl asserts that “the invisible hand … powers market economies.” 
Smith did not claim that “market economies” (Wealth of Nations) “powered market economies”, and neither did he claim that “the invisible hand” powered pre-market economies such as agriculture”, which was his subject in TMS which contains his other reference to the IH metaphor.
Market economies said Smith were “powered” always by VISIBLE prices - they could not work without them!
Moreover, his two (only) uses of the metaphor of “an invisible hand” were about different subjects, namely in Moral Sentiments it described the motivations of the parties, namely, “proud and unfeeling landlords” (in agricultural economies) and dependent serfs and labourers, working the landlord's fields in return for their families subsistence, leading unintentionally, over time, to the “propagation of the species” (TMS, part IV, chapter 1, pp 184-5), and in Wealth of Nations it described how a merchant, seeking safe investments, intentionallly invested his capital locally, thereby unintentionally adding arithmetically to “domestic revenue and employment” (WN Book IV, chapter 2, pp 456; think GDP). 
In neither case was it about market economies being “powered by an invisible hand”. 

(For the record, I know Smith referred to “the invisible hand of Jupiter” in his History of Astronomy (1748-c.58) which, of course, had nothing to do with “market economies”. Anyway, his use of the "IH" on the occasion was as a proper noun, not as a metaphor!).


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