Why Didn’t P. Oslington’s Invisible Hand (the ‘Providential Hand of God’) Prevent the Destruction of the Scottish Macro Economy by the Projectors, Imprudent Risk Takers, and Prodigals in 1772 after the Ayr Bank Collapse?

Abstract

P. Oslington’s (2012) Invisible Hand (the ”providential hand of God”) is viewed by him as the providential hand of God, who is watching over the macro economy of Scotland to make sure that nothing evil befalls the Scottish economy. The problem is that Oslington is completely oblivious to the collapse of the Ayr bank in 1772, which resulted from massive financial speculation in land engaged in by British East India Company connected borrowers whose bubble collapsed in 1772, ushering in a four year depression in Scotland and a worldwide recession. Oslington never mentions the national and international, coercive economic power of the British East India Company, which dominated the English economy for well over 200 years. Oslington never mentions Smith’s great concerns about the very negative economic impacts on society as a whole of the prodigals, imprudent risk takers, and projectors that Smith discussed extensively on pages 279-341 of the Modern Library (Canaan) edition of the Wealth of Nations with the foreword of Max Lerner. Oslington never mentions the Ayr bank collapse, a direct result of extensive land speculation by British East India Company borrowers, which resulted in the collapse of the Scottish economy from 1772-1776. G. Kennedy made it quite clear that it is simply impossible for any type of “Invisible Hand” to be operating to maximize economy wide benefits for all in the face of such groups of upper income class citizens, such as the prodigals, imprudent risk takers, and projectors, unless their economic activities are heavily constrained or suppressed by government action by a government that is independent of entities such as the British East India Company. The idea of an Invisible Hand is a necessary condition for the acceptance of Laissez Faire. Nowhere in the Wealth of Nations (WN;1776) is there a single mention of “laissez faire”, a concept Smith was well aware of from his interactions with the French Physiocrats in the 1760’s. The reason why there is no mention of laissez faire is because Smith rejected completely any kind of metaphysical, as opposed to metaphorical, view of a Invisible hand as some kind of Wizard of Oz.