Adam Smith’s Lost Legacy

Adam Smith’s Lost Legacy is the name of a blog I found this evening.  I found it because of a link to my post here where Gavin Kennedy took issue with my attribution of an “invisible hand” to Adam Smith in the classic The Wealth of Nations.

Here’s a link to Mr. Kennedy’s post where he seemingly ignores history in order to refute what I had to say.  For example, Mr. Kennedy says:

Adam Smith did not ‘coin the phrase’ at all; he used a fairly commonplace metaphor, well known to readers in the 18th century, though less so in the 19th and hardly at all to readers in the 20th century until it was dusted down by some economists in the 1950s, given an entirely bogus meaning, turned into a ‘theory’, a ‘paradigm’ even, and widely publicized to add popular mystical properties (even implying religious purposes) to how markets work compared to state-run communist economies (a bye-product of the Cold War).

It sounds really good, but it’s simply not true.  EVERY source I found tonight says the Adam Smith coined the term in The Wealth of Nations.  It seems that no one – except the self proclaimed Adam Smith expert Mr. Kennedy – disputes this. Here are a few:

Mr. Kennedy gives no documentation for his assertion that it was a “fairly commonplace metaphor, well known to readers in the 18th century”, he simply asserts it as a fact.

I need to provide a disclaimer here – I am not, and do not claim, to be an expert on the economic theory presented by Adam Smith.  In fact, I am not an expert on any economic theory.  I simply read a lot and compare what I read with what I see in the real world.  From that comparison, I make up my own mind as to what is fact and what is simply wishful thinking or revisionist history.

In an email years ago, I compared Adam Smith to George Bush I, saying that in passing himself off as a Conservative, Bush did more harm to the Conservative cause than any enemy could ever do.  In the same way, when people idolize Adam Smith and pretend that he invented and described capitalism, they are doing more harm than good to the entire concept of capitalism.  (The comparison applies equally to his idiot son.)

I am not a defender of Adam Smith, and I don’t have an ax to grind with Mr. Kennedy.  He simply pissed me off when he said that I didn’t know what I was talking about in my criticism of President Obama’s statement.

I am not a scholar, and I do not parse words as diligently as Mr. Kennedy in order to find subtle (or non-existent) nuances.   I think words mean things, words are verbal symbols which stand for concepts, and the meaning of those verbal symbols is is what matters.  We use words to communicate, and communication means the transfer of knowledge from one person to another.

In other words, I don’t care how many economists sit on the head of a pin and debate what they think Adam Smith meant when he said “invisible hand”.  By common definition, and a literal reading of the book, it essentially means to leave me the hell alone.   Laissez-faire.   It means that when I make a decision on how to spend my money, I’m unknowingly creating a more efficient method of distribution.  I’m unknowingly creating market forces which shape society – and I don’t give a rats ass if it happens to shape society for the better or for the worse.

The whole concept of “invisible” means that the results are unknown, that they can’t be planned, that the creator of the market forces which actually shape the economy and society do not know what they’re doing at the time.

That’s why I took issue with Obama’s use of the term “invisible hand” in the manner in which he used it.  That’s why I said Obama doesn’t have a clue.  In saying that he wanted to “guide the market’s invisible hand” Obama was displaying his ignorance of the entire concept – not simply a book from the 18th century.

BTW – If you want to chase your tail in circles and never actually learn anything, read the blog Adam Smith’s Lost Legacy.  I spent some time on it tonight, and I can honestly say that I spent time there.

Mr. Kennedy has somehow perverted Smith’s book into a manifesto for socialism.  Here’s a quote from a comment he made about the passage “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.

In describing the passage, Mr. Kennedy said “It is about how people exchange what they have for what they want, and they do so, not by promoting their own self-interest but by serving the self-interest of others.”

I defy anyone to explain how to reconcile what Adam Smith said with what Mr. Kennedy claims he said.

After reading literally dozens of Mr. Kennedy’s posts tonight in an attempt to understand what he was trying to say, I am no better off than before I started.  Mr. Kennedy seems to have an ability to write at length without ever actually saying anything.

Go ahead, check out his blog.  If you can make sense of what he’s trying to say in defense of Adam Smith, please explain it to me.  The only consistency I can find is that he objects whenever someone use the term “invisible hand” in context.  It’s as if his life is devoted to twisting the meaning of a commonly understood phrase into something else.

He reminds me of the utter worthlessness of trying to apply Immanuel Kant’s theories in the real world.  It’s simply an academic exercise, which produces absolutely nothing of value.

gk


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2 Responses

  1. I have responded to your post’s main ideas on my web site, without wishing to start an inteperate exchange. My hope is that this clarifies the historical facts about Adam Smith’s use (only once in Wealth Of Nations) of the popular 18th-century literary metaphor (details in the post) of an ‘invisible hand’, which has nothing to do with markets, and the modern use of the metaphor which from the 1950s became a ‘theory’ that there was something mystical about how markets work.

    The confusion between these historical facts, and modern economists’ misrepresentation that their use of the metaphor had anything to do with Adam Smith, is the source of much misunderstanding. It is important because beliefs about mystical forces in markets lead people today to assert false ideas that any action of people in markets – even polution, fraudulent monopoly pricing and unsafe products, etc., – is somehow beneficial to the public good.

    If modern ecopnomists wish to believe such alien ideas that is their right; they have no right to attribute them to Adam Smith to give them authority.

    Smith explained how markets worked and didn’t use an invisible hand metaphor to do so, and he asserted, correctly, that markets were better ways to manage production and distribution than governments, with the proviso of liberty, the rule of law (including punishment of offenders), and competition, summed up as markets were preferred where possible, government where necessary.

  2. I appreciate your thoughtful reply Mr. Kennedy, even though I still disagree with your conclusions. I also read your longer post at:
    http://adamsmithslostlegacy.com/2009/02/reply-to-commentator.html and your paper at:
    http://adamsmithslostlegacy.com/Articles_07.htm

    If anyone (besides myself and Mr. Kennedy) is interested, they can read my response at:
    https://www.blogger.com/comment.g?blogID=11437041&postID=5221969189416634405

    gk

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