Forces unseen, and maybe never meant to be [Quartz]( [A large scale sample of the new twenty pound note is seen during the launch event for the new note design at the Turner Contemporary gallery on October 10, 2019 in Margate, England. A hand is reaching towards it.]( Photo: Getty Images(Leon Neal) Forces unseen 18th century Scottish moral philosopher Adam Smith probably did not expect to become known as the [father of capitalism](, but he almost certainly never foresaw that his usage of one phrase would serve as something akin to holy law for proponents of laissez faire economics. Smith did write the phrase âinvisible handâ three times in his works, but each usage is different and none are framed as a prescription for economic policy. To date, there is no consensus on what Smith meant by it. Some have [hailed the metaphor]( (pdf) as âone of the greatest ideas in history,â and others have deemed it no more than a ârhetorical deviceâ or âan ironic joke.â When understood within the context of Smithâs arguments, and the broader scope of his thought, it becomes clear why âinvisible handâ can take on an [ambiguous](, if not contradictory, meaning. So how did a passing reference Smith made thrice in his writing come to symbolize an ideology the philosopher would likely disagree with? And when did âinvisible handâ get the appendage âof the marketâ? Look! Some visible facts! [A crowd gather to watch the unveiling of a 10ft bronze statue of Scottish economist, philosopher and author Adam Smith (1723-1790) at the Royal Mile on July 4, 2008 in Edinburgh, Scotland.]( Photo: Getty Images(Jeff J. Mitchell) Selected works Adam Smith (1723-1790) was a leading figure in the [Scottish Enlightenment](, an 18th century intellectual and cultural movement that marked a shift away from established religious thought and towards humanism and rationalism. Smithâs most famous works are: ð [The Theory of Moral Sentiments]( (1759) A laying out of Smithâs moral philosophy. He argues that while humans can be selfish (a belief held by his peers Bernard Mandeville and Thomas Hobbes), they also have the [capacity for sympathy](, or the ability to care about others, a trait he sees as innately human. Smith argues humans can make moral judgements, and develop social unity, because we can sympathize. ð [An Inquiry into the Nature and Causes of the Wealth of Nations]( (1776), often shortened to The Wealth of Nations A work of political economy considered a cornerstone of classical economics, introducing key concepts such as the division of labor, absolute advantage, and gross domestic product. It is also seen as an extended critique of mercantilism, the dominant economic theory of Smithâs day, which relied on trade protectionismâlow imports, high exportsâto drive national growth. In The Wealth of Nations, Smith argues for an alternative, free market system. He proposes that seeking personal benefit and serving the public good are not mutually exclusive, and insists that the natural forces of a free market, guided by individuals making self-interested economic decisions, will lead to the greatest enrichment and benefit of society as a whole. Quotable âAs every individual, therefore, endeavors as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. 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 maybe 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.â â Adam Smith, making his one âinvisible handâ reference in The Wealth of Nations (bold and emphasis in the quote added). In a chapter about international commerce, Smith makes an argument for free trade and against mercantilist protectionism. He says that removing import restrictions will not harm a nationâs economy, because merchants will naturally prefer to invest at home rather than abroad. Chartable [A chart showing the Dow Jones Industrial Average going way down after Sept. 29, 2008.]( Graphic: (Julia Malleck) [Send us your best guess](mailto:hi@qz.com?cc=&subject=Thoughts%20about%20Adam%20Smith's%20invisible%20hand%20&body=) as to what act of the invisible hand sent things plummeting. Weâll tell you what the chart depicts before everyone else finds out in the next Obsession. Brief history of âinvisible handâ interpretations [1752:]( Smith becomes the chair of moral philosophy at the University of Glasgow. [1759:]( The Theory of Moral Sentiments is published, where the metaphor âinvisible handâ appears in an observation that the rich unintentionally help the poor obtain the ânecessaries of life.â [1776:]( The Wealth of Nations is published, with âinvisible handâ appearing in a passage arguing against British trade protectionism. [1795:]( Smithâs Essays on Philosophical Subjects is posthumously published and mentions âinvisible handâ in a lecture he delivered at Glasgow University during his tenure, [likely before 1758](, on the topic of how early humans perceived natural phenomena. [1944:]( Friedrich Hayek, Austrian-British economist and philosopher, publishes [The Road to Serfdom]( (pdf), a foundational text for classical liberalismâi.e. laissez faire economics. His economic theory, which draws upon Smithâs âinvisible hand,â and the ideas of other Scottish Enlightenment thinkers, champions individual freedom and warns that central planning leads to totalitarianism. âInvisible handâ also inspires his later writing on markets as being a product of â[spontaneous order](,â which he argues is best [left unregulated](. [1948:]( Economists William Nordhaus and Paul Samuelson, future winners of the Nobel prize, publish the first edition of Economics. It contains an edited quote of Smithâs âinvisible handâ passage from The Wealth of Nations. Economics, which eventually sells millions of copies and is translated into over 40 languages, becomes an authoritative textbook on the subject. [1977:]( Nobel prize-winning â[Chicago school](â economist Milton Friedman describes Smithâs âinvisible handâ as âthe way in which voluntary acts of millions of individuals each pursuing his own objectives could be coordinated, without central direction, through a price system.â [1980:]( Friedman publishes his book Free to Choose, which argues against government intervention, and describes âinvisible handâ once more as meaning âNo external force, no coercion, no violation of freedom is necessary to produce cooperation among individuals all of whom can benefit.â A show called â[Free to Choose](â begins running the same year on US public television. [1994:]( Harvard economic historian Emma Rothschild argues that all three of Smithâs references to âinvisible handâ are âironicalâ and that its meaning not only contradicts other parts of his work, but would have been an unsavory idea to him. [1998:]( Political economy researcher at Harvard Business School, Jonathan Schlefer, says in The Atlantic that âinvisible handâ is âtodayâs most mischievous misquotation.â He attributes the misunderstanding, in part, to the âinvisible handâ quote found in the aforementioned textbook, Economics, which he sees as edited in a decontextualized and misleading way. [2008:]( Harvard economist [Stephen Marglin]( argues in The Dismal Science that âinvisible handâ is an âincompleteâ idea and the âmost misunderstoodâ phrase in Smithâs work. [2011:]( Republican US presidential candidate Mitt Romney says on the campaign trail: âThe invisible hand of the market always moves faster and better than the heavy hand of government,â encapsulating a contemporary understanding of the term. [2017:]( In an extra scene from the documentary American Feud: A History of Conservatives & Liberals, Noam Chomsky, professor of linguistics emeritus at the Massachusetts Institute of Technology, asserts that Smithâs âinvisible handâ has [nothing to do with]( endorsing the free movement of capital, but is actually cited as assurance that there is natural protection against it. Fun fact! One of the [earliest mentions]( (pdf) of an âinvisible handâ can be found (depending on translation) in Ovidâs Metamorphoses (8 AD)âa book Adam Smith had in his library. The Loeb edition, translated by Frank Justus Miller, reads: âThere in his vitals twisted and plied his invisible hand [Caecamque in viscera movit versavitque manum vulnusque in vulnere fecit]â when referring to the unfortunate gutting of a centaur. [The shadow of a hand looms over some sort of map.]( Graphic: (DALL-E 2 / Quartz) Pop quiz Who has not made an invisible hand reference? A. George Carlin B. A 12th century monk C. SpongeBob SquarePants D. Shakespeare The correct answer is visible at the bottom. Take me down this ð° hole! Although Smith believed in the allocative power of a free market, he was not the free enterprise fanatic heâs often cracked up to be, nor did he think the market was wholly self-regulating. In fact, he was critical of capital owners, and in favor of public works and financial regulation. The following ideas from The Wealth of Nations can be [interpreted as contradicting]( the contemporary, free market usage of âinvisible hand.â ð¤ On capital owners. Smith [voices his distrust]( towards merchants and manufacturers, or capital owners, on several occasions. In one chapter, Smith writes about âthose who live by profit,â or what he terms the âthird orderâ in society (the first and second orders being landlords and workers). He says the third orderâs âinterest is never exactly the same with that of the public,â and that it has a tendency to âdeceive and even to oppress the public.â He further cautions against adopting âany new law or regulation of commerce which comes from this orderâ without careful consideration. ðï¸ On public institutions. Smith says that the state should provide goods and services, citing roads and education as examples, for the benefit of the public. He asserts that a sovereign has âthe duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.â ðï¸ On financial regulation. Smith endorses the [need for financial regulation](, and also expresses his concern towards the [monopolistic tendencies]( of merchants and manufacturers. In a passage endorsing banking regulation, he says âthose exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments.â He goes on to compare the implementation of a banking regulation to [fire codes](, or in his words, building walls to prevent âcommunication of fire.â [A very odd-looking hand, a weird globe, and some musical instruments, sort of.]( Graphic: (DALL-E 2 / Quartz) Poll What are your thoughts on Adam Smithâs âinvisible handâ after reading this? - Invisible hand?? In this economy?!!!
- If only the invisible hand could help clean my house
- I have a visible headache [Letâs see your thoughts!]( ð¬ Letâs talk! In last weekâs poll about [Spam](, only 1% of you confessed to eating the canned American export daily, and 63% wouldnât touch it at all. Our Twitter and LinkedIn followers were even more adamant about keeping Spam in the can, with between 74% and 80% saying no thank you. Maybe itâs time to branch out! ð¦ [Tweet this!]( ð¤ [What did you think of todayâs email?](mailto:hi@qz.com?cc=&subject=Thoughts%20about%20Adam%20Smith's%20invisible%20hand%20&body=) ð¡ [What should we obsess over next?](mailto:hi@qz.com?cc=&subject=Obsess%20over%20this%20next.&body=) Todayâs email was written by [Julia Malleck]( (possesses visible hands) and edited by [Susan Howson]( (has only seen Juliaâs hands through videoconferencing, so cannot truly confirm). The text-to-image AI generator DALL-E 2 was our invisible hand through some of our image sourcing. The correct answer is C., SpongeBob SquarePants. But the show does have the [invisible boatmobile](. George Carlin has [a snarky joke]( about the âinvisible hand,â 12th century Benedictine monk Petrus Cellensis [made a reference to it]( in his writing, and Shakespeareâs Macbeth invokes it in a line from [act 3, scene 2]( of the eponymous play. [ð View or share this email online.]( Enjoying Quartz Weekly Obsession? Forward it to a friend! They can [click here](quartz-obsession) to sign up. If youâre looking to unsubscribe, [click here](. 1290 Avenue of the Americas, New York, NY 10104 © 2022 G/O Media Inc.