Friday, November 25, 2016


Jeff Jacoby posts (27 November) in The Boston Globe, 2003, ‘Giving thanks for the ‘invisible hand’:
“The Invisible Hand delivered your turkey”
“Adam Smith called it “the invisible hand” — the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many. Out of the seeming chaos of millions of uncoordinated private transactions emerges the spontaneous order of the market. Free human beings freely interact, and the result is an array of goods and services more immense than the human mind can comprehend. No dictator, no bureaucracy, no supercomputer plans it in advance. Indeed, the more an economy is planned, the more it is plagued by shortages, dislocation, and failure. …
… So yes, thank the Invisible Hand for your turkey.
But you still have to carve it. Unless, of course, the Invisible Hand pre-carved it for you because you are too damn lazy and willing to pay a little extra.”
It is that time of year when the above fairy tale is pulled out of the files and posted on the worldd’s print and web media.
It is of course a nonsence that there is an actual ‘invisible hand’ (God’s or whatever “mysterious power” is called up to mystify the working of markets).
MARKETS can only work by the VISIBLE prices inherent in markets - and cannot work at all without their VISIBILITY.
Miss-applying Adam Smith’s use of a metaphor by generalising it into a mysterious role in markets, while ignoring the many occasions in which the actions of people do not lead to socially benign outomes.

Many such incidents discussed by Adam Smith in Wealth of Nations, are ignored by advocats of a mysterious ‘hand’ like Jeff Jacoby, and the editors in The Boston Globe, who every year re-cycle a pernicious political myth and discredit the scholarly integrity of Adam Smith.


Blogger Alan said...

Jacoby's nonsense is republished on p.153 of the 5th edition of Mankiw's Principles of Macroeconomics. Mankiw is a true believer  in "the invisible hand of the market", an idea he credits to Smith. It should be no surprise that the Boston Globe continues to publish Jacoby's piece when economics professors are dishing up the same turkey in widely-used textbooks and across the Charles River at the 'World's Greatest University' (tm).

4:41 pm  

Post a Comment

<< Home