An Authentic Account of Adam Smith

Gavin Kennedy

• Publisher: Palgrave Macmillan
• Year: 2018
• ISBN:
  9783319638027
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

This book is a textual criticism of modern ideas about the work of Adam Smith that offers a new perspective on many of his famous contributions to economic thought.Adam Smith is often hailed as a leading figure in the development of economic theories, but modern presentations of his works do not reflect Smith's actual ideas or influence during his lifetime.

Gavin Kennedy believes that Smith's name and legacy were often appropriated or made into myths in the 19th and 20th centuries, with many misconceptions persisting today. Offering new analysis of works on rhetoric, moral sentiments, jurisprudence, the invisible hand, The Wealth of Nations, and Smith's very private views on religion, the book gives a new perspective on this important canonical thinker

© The Author(s) 2017

Gavin KennedyAn Authentic Account of Adam Smithhttps://doi.org/10.1007/978-3-319-63802-7_5

Begin Abstract

Adam Smith and the ‘Invisible Hand’

Gavin Kennedy¹

(1)

Edinburgh, UK

Gavin Kennedy

Email: [email protected]

End Abstract

***

Introduction

Multiple references to Adam Smith’s use and supposed meaning of the 2-word metaphor of ‘an Invisible Hand’ today stand in stark contrast to the almost total absence of mentions of the same metaphor whilst Smith was alive and for many decades after he died in 1790. Contemporary sources such as the Monthly Review (1776) did not mention the ‘Invisible Hand’ and nor did his contemporary critic, Governor Pownall, September 1776, mention the ‘Invisible Hand’ in his long and detailed critique of the Wealth of Nations. ¹

Significantly, ‘the Invisible Hand’ only became a subject for academic discussion very slowly, from a few mentions in the 1870s in very limited circulations, until the mid-twentieth century. There may have been unrecorded oral mentions of which to date we have had no access. However, from the 1960s mentions of the ‘Invisible Hand’ rapidly grew both in academic and public or media discourse, until mentions became ubiquitous from the 1970s. They remain ubiquitous in 2017.

Exceptionally, Dugald Stewart, the son of Michael Stewart, a fellow student of Smith’s at Glasgow, and close family friend, referred to a theological version of the ‘Invisible Hand’ of God in 1792. Dugald wrote:

he follows blindly his instinctive principles of action, [and] he is led by an Invisible Hand and contributes his share to the execution of a plan …even in those rude periods of society, when like the lower a animals, he followed blindly his instinctive principles of action, of the nature and advantages of which he has no conception (Stewart 1792).

We can on occasion read similar theological assertions linking the ‘Invisible Hand’ to ‘a plan’ even today. Of relevance to my general point, Dugald Stewart, published his own economics lectures verbatim that he delivered at Edinburgh University, which included extracts from Wealth of Nations in the form of long footnote quotations, relating to the topics he discussed in his own lectures. One of his extracts included the very paragraph containing Smith’s singular reference to ‘an Invisible Hand’ in Wealth of Nations. Noticeably, Stewart focussed on that paragraph’s general economics content, and ignored Smith’s use of the ‘Invisible Hand’ altogether. However, there is some concern, as expressed by Sir William Hamilton, Editor of the 1855 papers, that many pages of Dugald’s relevant political economy manuscript papers were missing, believed destroyed by a member of his family, specifically his son, Col. Stewart, who reportedly suffered from a mental illness, and, therefore, the extant papers remain incomplete (Stewart 1855).

In a similar singular example, the ‘Invisible Hand’ in Smith’s Wealth of Nations paragraph was paraphrased by Buckle, in 1859, without his commenting on the ‘Invisible Hand’ metaphor itself.

After the 1870s there was a minor flurry of isolated mentions, literally by only a handful of authors, on Smith’s use of the ‘Invisible Hand’, which was followed by long near silences, interrupted occasionally by individuals discussing Smith’s ‘Invisible Hand’, such as by Frederick Maitland, a Lawyer, in a paper for his Cambridge Fellowship, who referred directly to the Invisible Hand. ² Generally, Smith’s use of the now infamous metaphor, was hardly mentioned in either the academic or the popular press.

I found a singular exception in my collection of nineteenth-century editions of Smith’s Wealth Of Nations. It is in the 1891 edition of Wealth of Nations, edited by J. Shield Nicholson, Professor of Political Economy at Edinburgh University. Nicholson includes a 32-page Introductory Essay on WN. ³ On page 2 of his essay, Professor Nicholson, criticises ‘the prevailing error that Political Economy inculcates selfishness’, and responds with Smith’s long-ignored paragraph that self-interest results in the ‘general benefit of society’, and quotes: the merchant ‘generally, indeed, neither intends to promote the public interest nor knows how much he is promoting it … and he is in this and many other cases, led by an Invisible Hand to promote an end which was no part of his intention.’

Professor Nicholson, in the context of his quotation and his comments, clearly considered the ‘Invisible Hand’ was a force of God and not a metaphoric literary device of Smith’s. However, the main point cannot pass unnoticed that Nicholson’s direct reference to this passage was most unusual amongst authors after Smith died in 1790, until the 1870s.

There are a few other exceptions up to 1948, when the frequency of mentions of the ‘Invisible Hand’ slowly accelerated until the late 1960s, when mentions of the ‘Invisible Hand’ increased to become a veritable flood that still flows strongly.

Samuels, after completing 12-years of studying the role and use of the ‘Invisible Hand’ in the world’s economic literature, reported that ‘Incomplete data for materials published in the English language – principally, but not solely, economic writings – suggest that between 1816 and 1938, the average annual level of writings in which the ‘Invisible Hand’ appeared was very low, confirming my assertions from my own library searches.

Thereafter, writes Samuels, from roughly 1942 through 1974, the average annual level of writings doubled; from 1975 through 1979, it roughly doubled again; and between 1980–1989, it was approximately 6.5 times higher than it had been during 1942 through to 1974. Between 1990 and 1998, the average annual level was a little more than eight times that of the 1942–1974 level and slightly more than 20 percent higher than the 1980-1989 level. During 2000-2006, the average annual level seems to have receded to a level slightly more than 60 per cent of the 1990–1999 level, the highest level reached so far. ⁴

***

This chapter addresses this strange phenomenon of an apparent disinterest in Smith’s use of the ‘Invisible Hand’ whilst he was alive and for long after his death in 1790, up to the 1870s. This was followed by an, albeit very slow beginning of cumulative mentions, then a slow acceleration after 1948, and finally a veritable stampede of widespread references from the mid-1970s onwards that continues on an even larger scale and in an ever wider-spread of in-depth acclaim across all media today, with abundant and varying versions of what the ‘Invisible Hand’ supposedly means.

The idea of a theological ‘Invisible Hand’ has a longer and deeper history than the secular use of it by Adam Smith. It has been in regular use in theological contexts since the seventeenth century (Harrison 2011).

There were various literary mentions of a ‘hidden hand’ in fiction and they include, for example, its use by Sir Walter Scott, at the time, Scotland’s leading historical author, in his novel, The Antiquary (1816). Scott paid homage to a then living artist’s framed painting on the wall of a fictional cottage in one of his stories. The named, living artist wrote to him, with the typical deferential modesty of the age, to say that Scott’s reference to his work had placed him under a ‘debt of obligation’, because by his mention of his ‘unseen hand in The Antiquary, you took me up, and claimed me, the humble painter of domestic sorrow, as your countryman’.

Another isolated early mention was by the popular Scottish, charismatic Calvinist Presbyterrean preacher, Thomas Chalmers (1780–1847), who in 1833, preached the ‘Invisible Hand’ of God that ‘bespeaks of a master hand’ that renders ‘the greatest economic good…by the spontaneous play and busy competition of many thousand wills, each bent on the prosecution of its own selfishness’. ⁵ Chalmers wed his theology to his version of Adam Smith’s political economy, which appealed to his large evangelical congregations and readers of his several books in his heyday.

In contrast, leading political economists, such as David Ricardo, Jean-Baptiste Say, Thomas Robert Malthus, John Stuart Mill, Alfred Marshall, William Stanley Jevons and others, who read and commented in detail on Wealth of Nations and who published their comments on Adam Smith’s political economy widely, yet all maintained a manifest silence about Smith’s supposed crowning glory of ‘an Invisible Hand’, thus implicitly crediting the metaphor with no great significance.

Typical of this group of specialists, who studied Adam Smith’s Wealth of Nations in depth, was J. R. McCulloch, who started publishing, the first of several editions of WN in 1828, laced with his comments, both critical and complimentary within Smith’s text and its 669 pages. His 3rd edition of his WN text was published in 1885. Given McCulloch’s detailed comments on Smith’s text throughout WN, it is remarkable that McCulloch said not a word about Smith’s use of the ‘Invisible Hand’ metaphor in the relevant passage in Book IV.2, p. 199. Moreover, there are 14 footnotes, some quite long ones, in this chapter alone, but none that relate to the famous metaphor, indicating how non-consequential contemporary readers regarded the ‘Invisible Hand’ (Ramsay McCulloch 1872).

The long silence amongst leading political economists up to the 1770s contrasts with the assertions of most modern economists today, who consider Adam Smith’s use of the ‘Invisible Hand’ to be two words of the highest significance in all of economics. These assertions and their related assumptions remain manifestly untrue. Yet today, judging by the evidence of the mass of economic publications across the world, the ‘Invisible Hand’ currently enjoys the status of enormous significance for many economists. If the ‘Invisible Hand’ metaphor had any degree of the significance that is attributed to it today, the fact of the absence of mentions of the now famous metaphor by Smith’s contemporaries, and those leading economists who came immediately after him, well into the late-nineteenth century, suggests the contrary view that the metaphor as used by Adam Smith was generally considered to be of little significance amongst major figures in the history of economic thought, and that this view was shared by Adam Smith himself.

Exhibit 3: Some General Theological References to ‘an Invisible Hand’, from Ancient Times to the eighteenth-century:

1 Ovid: ‘his Invisible Hand, inflicting wound within wound’; (8 AD).

2 Lactantius,’ his shoulder plunged the sword.writh’d his hand, deep in his breasts, made many wounds in one’; invisibilis’ (250–325 AD);

3 Augustine, City of God: ‘moves visible things by invisible means’, (340–430 AD);

4 Shakespeare, W, (1606): ‘Thy Bloody and Invisible Hand’;

5 Glanvill, J. ‘nature by an Invisible Hand in all things; ‘invisible intellectual agents’ (1661);

6 Voltaire (1718): ‘an Invisible Hand suspends above your head’;

7 Defoe, D: (1723) ‘A sudden Blow from an almost Invisible Hand’, (1722);

8 Charles Rollin (1738) said of the Israeli Kings, ‘the Invisible Hand which conducted them’;

9 William Leechman (1755): ‘the unseen silent hand of an all wise providence’;

10 Charles Bonnet, (1781): ‘led to its end by an Invisible Hand’, in ‘Contemplations of de la Nature’;

11 Jean-Baptiste Robinet (1761): ‘basins of mineral water, prepared by an Invisible Hand’ in De La nature’;

12 Walpole, H. 1764: ‘with violence by an Invisible Hand’;

13 Reeve, C. (1778): ‘he was hurried away by an Invisible Hand’.

William Leechman, Charles Bonnet, Jean-Baptiste Robinet, Walpole, and Reeve, were all contemporaries of Adam Smith, indicating their relatively widespread familiarity of references to an ‘Invisible Hand’ in general literature. Yet none of them appear to have commented on Smith’s use of it.

Clearly, the ‘Invisible Hand’ had a long history of its use by many others, primarily in theological contexts, before Smith used it ...

Table of contents

• Cover
• Front Matter
• Introduction
• How Adam Smith Learned to Bargain
• Adam Smith on Rhetoric and Perspicuity
• Adam Smith on Metaphors
• Adam Smith and the ‘Invisible Hand’
• The Social Evolution of Jurisprudence
• Smith’s Wealth of Nations
• Smith’s Alleged Religiosity
• Back Matter