Adam Smith and the‘invisible hand’

Abstract

What I intend to do in this article is critically to examine Adam Smith's idea of‘invisible hand’, following the passages in which the phrase appears.As is known well, the phrase‘an invisible hand’appears three times, that is to say, once each in EPS, TMS and WN. Its appearance in EPS, however, does not imply any particular problem. And in the case of WN, there is also a place where the phrase is only implied, i. e. in its Book III, Chap. V (cf. A. Skinner, Introduction to the Pelican[Penguin]Classicsed. of the WN.).In TMS the phrase‘invisible hand’is made use of surrounded by the ancient Stoic creed on which the philosopher Smith is based. In that sense the phrase is outside the theory of sympathy which constitutes the basis of TMS, and the theory of so-called‘deception’used there in the sense that men's misfortune, mistakes and mere selfish acts contribute to the realization of the harmony of the whole society is not sufficient for the possibility of the formation of modern exchange economy society.In WN the phrase‘an invisible hand’totally implies a force to bring about an eventual harmony and welfare in the modern liberal society, and the function of this force is based on the formation of the theories of natural course (order) of the employment of capital. However, the collapse of the theory as such is evident. Moreover, since J. Viner's treatise pointed out, it is well known that Smith is not exhaustive in the criticism of so-called mercantilism, the work of the‘invisible hand’is confined.In Book III of WN, a transcendental power is talked of to cause a great revolution by its action on unworthy common men, where Smith's historical philosophy is evinced which somehow resembles Hegel's‘List der Vernunft’. But such a work in fact of the‘invisible hand’appears only once, and merely implicitly in WN so that Smith's elucidation here does not have universal validity.Quite naturally, the phrase‘an invisible hand’is a symbolic term which a particular age gave birth to and therefore, so far as it goes it can be the object of academic analysis but not its means.