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Poland, America, and The Invisible Hand

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  • Poland, America, and The Invisible Hand

    I have long believed that Adam Smith is the most widely-quoted and least-read famous economist in history. To hear people go on about him, you would get the distinct impression that the core thesis of his Wealth of Nations was The Invisible Hand. So how many times does he mention it?

    Once.

    In the entire Wealth of Nations he mentions the invisible hand exactly once, in Book IV. Here is the quotation, just so you can actually say you’ve read it (unlike most folks who rattle on about Adam Smith as if they know something):

    By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

    Smith originally introduced the idea of an invisible hand appearing to guide action in his early work, The Theory of Moral Sentiments. It may seem odd to talk about an “invisible hand” in a book on morality and ethical behavior. To hear die-hard laissez-faire free-marketeers tell it, the invisible hand is all about avoiding any and all restrictions on the exercise of self-interest. Ayn Rand, darling of the laissez-faire crowd, went so far as to elevate selfishness to the status of a virtue, and label altruism as immoral and destructive.

    Smith knew better. He stopped well short ...




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