Is the Invisible Hand …

… one of Adam Smith‘s key theories, a “mildly ironic joke,” or “a popular literary 17th- to 18th-century metaphor with no significance”? Arguing for number three, Gavin Kennedy keeps the debate alive, in a new paper published in Econ Journal Watch. [%comments]


science minded

A great question, I have reason to think, but don't know whether or not it was midly ironic. I will leave this question to others to work out. My question is "whose hand" or hands and the answer to that question is one that I do know the answer to?

Johnnye

The GDP's is an invisible joke too. As Thom Hartmann just mentioned on his radio ahow, even when you have an oil spill and spend millions cleaning it up, those numbers get added to the GDP.

So a rising GDP isn't exactly a measure of progress. He had a bunch of other examples.

jim

Sadly, I think it was a joke. Growing up, I was taught very matter-of-factly that the economy is always under the influence of the invisible hand, as thought it were gospel. I now imagine Adam Smith conspiring with others to see if they can make up something silly that the world will believe. At least Smith is contested here, unlike the notion of 15th century flat-earthers, or palm-centric stigmata.

If there truly is an invisible hand, here's hoping it separates the intelligent from the gullible.

John F

I don't see what the problem is. Perhaps the "invisible hand" wasn't as big a deal to Smith as some people now think it to be. So be it. History is littered with examples of great minds who just barely or tangentially touched on their "breakthroughs" in passing and missed the significance, only to have the real power behind the thoughts brought to light years later -decades or centuries in some cases- by another great mind using their work as a stepping stone.

science minded

Dear John F-- You have reminded me of a fellow I once knew. He knew so much and had the intellectual capacity and breath of knowledge that we tend to associate with great minds. What was he missing? Truthfully, it's hard to say- he was huge and apparently died of a heart attack so we will never know for sure- Having heard him speak on a number of occasions, I would say perhaps that he was missing that "je ne sais qua" of having an original idea in the sense that an idea has to be correct in science if one is to accomplish anything worthwhile and in the sense in which there have been certain times throughout history when ideas "like switchmen" have determined "the tracks along which action is pushed by the dynamics of interest." . Max Weber

John

@jim: Adam Smith is *not* contested in Kennedy's article. Kennedy merely suggests that the meaning of "invisible hand" used by modern economists can't be reconciled with Adam Smith's usage. I think there is merit to Kennedy's thesis, but I also agree with John F., that we needn't be limited to a historically narrow conception of the invisible hand-- language and ideas evolve over time.

Gavin Kennedy

I agree with jim and john F about the legitimacy of modern interpretations of an 18th century metaphor. Indeed, the metaphor itself has a long history back to classical times and was used in abundance from the 16th century onwards (I have seen a list of 41 uses in religous writings from the 17th century and my research research shows another abundance of uses in the 19th century among both religous and fiction writers).

However, since its use in Homo economicus theories, an invention by modern economists, and its simultaneous attribution to Adam Smith asserting that he supports its modern meaning (when his texts show that he clearly didn't) my criticism remains valid.

In modern hands it became ideological in theories of general equlibrium. Let modern users of the metaphor put their names to their theories of markets, but leave Adam Smith's name out of it. He had a set of theories about how markets work that included why they were constrained by moral norms. He never subscribed to Homo economicus single focus on rationality.

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