Monday, July 04, 2016


On Hacker News ‘anon’ posts a most welcome reference to what Adam Smith meant by his use of the invisible hand and kind reference to Lost Legacy HERE
"The "invisible hand" metaphor used by Adam Smith is not an explanatory mechanism, and if anything is an admission that the specific mechanism isn't understood. In use at the time and earlier, it had the sense of "the invisible hand of Providence" (or God). Though Smith, as Hume, was almost certainly what we'd now call an athiest.
He used the term three times, in three different books: The Theory of Moral Sentiments, then An Inquiry Into the Nature and Causes of the Wealth of Nations, and finally in a book on the history of astronomy. It's clear from context that Smith wasn't embuing markets especially with invisible handedness, but using a common phrase of the age.
The modern invention of this metaphor dates to the 1930s and 1940s, being first used in its modern sense by Paul Samuelson, and latched onto like a desperate child by the budding organs of the Mont Pelerin Society, better known as the von Mises / Hayek / Friedman / Rothbardian variant of Libertarian theology. Its popular significance grew after publishing of Adam Smith's Invisible Hand, a compilation of modern economic fallacies miscast as truths, by Regenry Press, a Libertarian propaganda mill, in 1963. You can trace the evolution of the term via Google's Ngram viewer.
One of the more notable "quotations" from Smith's Wealth of Nations
Economic historian Gavin Kennedy has traced this history in depth, published multiple papers on it, and writes a blog, "Adam Smith's Lost Legacy", which I highly recommend.
(You'll also find some discussion of the false myth that's developed over the term in the very Wikipedia article you've linked.)
My own recommendation is that people actually read Adam Smith to see what he wrote and meant:

More on the Mont Pelerin Society:"


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