AN EXAMPLE OF SHALLOW SCHOLARSHIP
“Government Intervention and the Invisible hand”
The “Invisible Hand” is a concept coined by Adam Smith that is used to define any force – be it social, political, or economic – that brings an unbalanced market back to equilibrium, the point in which the price-to-quantity ratio in any producer-consumer transaction is equitable for both parties” … and etc & etc.
Below is a short statement which I made to debate.org some months ago HERE I replied: “No. It doesn't exist. It was a metaphoric expression used by Adam Smith to, as he put it, “describe in a more striking and interesting manner”, the hidden motives of individuals, whose self-interested actions have intended benficial consequences for them, but such actions by individuals may also have unintended consequences for them and others, sometimes benign and sometimes malign. Examples include businesses producing consumables that customers want and enjoy that may make society better off, while businesses persuading governments to impose tariffs, say, may reduce competition and raise prices, making consumers worse off. The metaphor of “an invisible hand’ is now widely applied without care to imply some mysterious entity consciously acting in markets to bring about benefits to everybody. Whereas governments and businesses that ignore poullution, say, may make everybody worse off.”
I would add after reading the imaginative account given by “nchanvez15” cited above that his supposed scholarly bibliography to his piece solely consists of:
“Ashraf N., Camerer C.F., Loewenstein G. “Adam Smith, Behavioral Economist.” Journal of Economic Perspectives—Volume 19, Number 3—Summer 2005—Pages 131-145. http://www.cmu.edu/dietrich/sds/docs/loewenstein/AdamSmith.pdf (accessed April 2, 2015).
Federal Reserve Bank of St. Louis. “The Role of Self-Interest and Competition in a Market Economy – The Economic Lowdown Podcast Series, Episode 3.” Federal Reserve Bank of St. Louis Web site. https://www.stlouisfed.org/education/economic-lowdown-podcast-series/episode-3-the-role-of-self-interest-and-competition-in-a-market-economy (accessed April 2, 2015).
Krugman, Paul. “Walmart’s Visible Hand.” The New York Times.March 2, 2015. http://www.nytimes.com/2015/03/02/opinion/paul-krugman-walmarts-visible-hand.html?_r=2 (accessed March 31, 2015).
Samuelson, Paul A. “Chapter 7: Economic Behavior and Rationality.” Economics: An Introductory Analysis. http://www.ase.tufts.edu/gdae/pubs/te/mic/3e/mic_3e_ch7.pdf (accessed April 1, 2015).
Tabuchi, Hiroko. “Walmart Raising Wage to at Least $9.” The New York Times. February 19, 2015. http://www.nytimes.com/2015/02/20/business/walmart-raising-wage-to-at-least-9-dollars.html (accessed March 31, 2015).”
Impressive, yet not a single bibliograhical reference to either of Adam Smith’s two books that mention the “invisible-hand” metaphor, Theory of Moral Sentiments (1759) or Wealth Of Nations (1776). Surely the author, “nchanvez15”, before writing so authoritively supposedly on “a concept coined by Adam Smith” would include in a supposed scholarly biography the supposed source of his imaginative interpretation of what the supposed source is supposed to have coined?
The fact is that Adam Smith did not “coin the concept” as asserted by the authors cited in his so-called bibliography. The “invisible hand” was well-known long before Adam Smith was born in 1723 and long before he used in as an adult. It was popular with theologians who saw it as the “hand of God”, and by authors like Homer (Illiad), Horace, Shakespeare (Macbeth), Defoe (Moll Flanders), Voltaire, (1718), Walpole, (1764), Reeve (1778), and etc.
Among modern scholars, following Paul Samuelson and those in nchanvez’s alleged bibliography, the metaphor has become a myth, now deeply ingrained in public commentary and the media.
Smith used it for quite modest purposes to “describen a more striking and interesting manner” (Smith: Lectures in Rhetoric and Belles Lettres, 1763), the hidden motives of human agents that lead them to act intentionally for a purpose. Such actions produce intentional outcomes, which may also have unintentional consequences, that may or may not be beneficial for them and for society.
It had nothing to with social equilibrium, laissez-faire (words never used by Adam Smith!), the need for government regulatiions, or anything else claimed for it by today’s epigones.