Savitri Era of those who adore, Om Sri Aurobindo and The Mother.

Saturday, October 06, 2007

Adam Smith did not introduce the ‘famous metaphor of the invisible hand’

Adam Smith did not introduce the ‘famous metaphor of the invisible hand’, despite what Wikipedia says. It was fairly common in 17th-and 18th-century literature, and long before then too in Greek and Roman times.
Free markets are not ‘actually guided by an invisible hand’. That is mysticism and while widely accepted by modern trained economists it is quite nonsensical if you think about it. Given, by definition, that nobody has seen the so-called invisible hand, how does anybody know that there is one? Is it of divine origin? Where’s the science in that?
It is a metaphor, not a reality; Adam Smith’s explanations of how markets work (Books I and II of Wealth Of Nations) make no reference to invisible disembodied body parts, nor, frankly, does he need to rely on a metaphor for what he explains perfectly clearly.
However, I agree with the last sentence of the piece: “The unpredictability of free markets is one of the most intriguing aspects of Adam Smith's world”. Correct! So what happens to the invisible hand while free markets are behaving unpredictably? posted by Gavin Kennedy at 3:50 PM 2 comments

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