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invisible hand

EconomicsPosted by Jan Lester Mon, April 07, 2014 14:57:20

invisible hand This expression has come to be used among *intellectuals as the process by which those engaged in *self-interested trade nevertheless usually benefit others. This is partly because both sides must, ex ante, receive a gain for themselves for a trade to take place, and partly because in *society as a whole resources thereby move to more highly valued uses.

It is interesting that Adam Smith (1723-1790) used this expression only once in his An Inquiry into the Nature and Causes of the Wealth of Nations (1776) (though also once in his The Theory Of Moral Sentiments [1759], and once in his, posthumously published, History of Astronomy, [1795]), and ironic that this was arguing that *protectionism is unnecessary because of the bias toward home produce among merchants. Thus this usage would flout the way the metaphor is generalized today to include the benefits of *free trade instead of buying from the home market. Such occasional inconsistencies as inevitably occur in the writings of *free market *economists cannot themselves undermine the soundness of their general arguments defending the free market (including free trade), and it is an obvious fallacy to think that they can. Or if they are taken as arguments from authority for some point (‘Even Adam Smith said ...’) then that is also a fallacy.

We might say that the opposite of the invisible hand of the market is the manifest jackboot of *politics. This is the typical process by which the, putatively, altruistic intentions of some *political agent might plausibly cause some immediate gain to the objects of his ‘generosity’ but which have the *unintended consequence of trampling on the *liberty of others and disrupting economizing behavior, ultimately to the detriment of all.

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