Skip to main content

Adam Smith's "Invisible Hand" for Dummies

You might not have heard of Adam Smith's Invisible Hand theory. That's okay. Of those who have heard of it, though, a fair number of them belittle the Invisible Hand, a metaphor for the process which is supposed to guide a free market economy to generally positive outcomes for everyone. They belittle the theories because they are dummies. Or because they are immoral. Or both. This short article is for them.

The Invisible Hand theory is this
[The business person] generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. ... 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.

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. ... By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.
Notice that Adam Smith said that we "frequently promote[]" the interests of society in a truly free market. Not always. Because none of us are perfect. But the farther we get from perfect, the less likely the Invisible Hand will function properly.

Notice also that Adam Smith didn't describe the Invisible Hand as working in an environment of rampant fraud. It absolutely will not work in such an environment.

If the Invisible Hand isn't working, it's my fault. And it's your fault. It works under normal circumstances. But our circumstances are becoming less and less normal every day. You need to do something about it.

John Adams warned that
Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.
It is no different for the free market. Free enterprise cannot be maintained except in an environment where the populace is predominantly moral and religious. As an American society, we've just about crossed the line.

If it's not working, I can't bear to think of the alternative. Because if it's not working, the most immoral people--the same ones who will have broken the free market with their rampant immorality--will be at the pinnacles of your government.

Watch out. We're almost there.



Comments

  1. “Free enterprise cannot be maintained except in an environment where the populace is predominantly moral and religious.”

    Utter BS. People who inextricably link morality with religiosity are “dummies”. Morality certainly does not require religion. In fact, in many cases, the two are diametrically opposed.

    ReplyDelete
  2. In other words, Don says John Adams is a moron. I recently purchased the DVDs of HBO's John Adams series, which is historically correct and masterfully done. 'Moron' is not the idea one gets of John Adams.

    ReplyDelete
  3. Yep, that's what I said . . . [rolls eyes]

    ReplyDelete
  4. Don,

    So please restate. Do you think that what John Adams said was correct? Because in a small sort of way John Adams did link morality and religiosity inextricably...

    ReplyDelete
  5. Don, God has provided us with many great leaders who are ready to lead. The problem was that the leaders did not want to get involved with the immoral. Once we start to turn down a new path (which we are), children of God will lead the way. Our leaders will lead once again to be great for the people and not to profit off of the people. Faith alone will say that God will never close one door without opening another!

    ReplyDelete

Post a Comment

Thank you for commenting. If you have a Google/Blogger account, to be apprised of ongoing comment activity on this article, please click the "Subscribe" link below.

Popular posts from this blog

Red Clothing and Resurrection: Jesus Christ's Second Coming

The scriptures teach that when Christ comes again to the earth, that he will be wearing red apparel. Why red ? They also teach that at Christ's coming, many of the dead will become resurrected. Will this only include members of the Church of Jesus Christ of Latter-day Saints? Not by a long shot, no matter what some Mormon might tell you.

To Have the Compassion of an Ogre

At least when it comes to using government as a weapon of compassion, I have the compassion of the ogre. I will explain below why I think government cannot and should not be in the business of compassion. The force of government has caused many people to show less compassion to their fellow men. On the other hand, some of the best things happen when government is not compassionate. In such circumstances, individuals personally begin to display more compassion. One such instance of this happened recently in Utah when the governor asked the legislature to convene a special session in order to (among other things) provide special monies to pay for dental care for the disabled . If they didn't fund the governor's compassion project, it would make the legislators look even more heartless in a year where the budget surplus was projected to be at least $150 million. In spite of these political odds, the legislature did not grant the $2 million that 40,000 members of the disabled...

The Legend of Enkidu and Shamhat: Wait!...Did I just Read About Adam and Eve???

The story of Enkidu and Shamhat seems similar to that of Adam and Eve.  See what similarities you can find in my description of the story of Enkidu, Shamhat, and Enkidu's alter-ego, Gilgamesh below.