ABSTRACT OF PAPER
Title: Smith's Invisible Hand: Controversy Is Needed
Author: Di Mario Flavia, Micocci Andrea
Flavia Di Mario, Andrea Micocci Smith’s Invisible Hand: Controversy Is Needed Too many economic practitioners identify, without causing any controversy, Adam Smith’s invisible hand with “the market” and/or with theoretical perfect competition. Precious few seem bothered by what the invisible hand actually is, and where and how did Smith ever define it. This metaphorical expression rarely used in “The Wealth of Nations” is described in Smith’s “Theory of Moral Sentiments”. In this last work Smith very precisely defines it as based upon a “deception” to be fed to the lower classes in order to transform them into what in “The Wealth of Nations” he would call the “commercial man”, with all the micro and macro economic consequences entailed. In Smith’s view in fact the market, or more precisely private initiative, depends upon the presence of a privileged, non-entrepreneurial class or set of classes living in luxury. Only thus can the “invisible hand” work itself out as the best means to the improvement of the nation’s “wealth”. The concepts of market fairness and class mobility in Adam Smith’s argument above need a lot of care to be compared to the liberal (and Marxist) arguments about it, because a conservative rather than a liberal state is endorsed. As a consequence, the neoclassical economists and the mainstream in general cannot easily claim Adam Smith as their ideal – and above all direct – ancestor. Nor can the Marxists easily associate him to the misdeeds of the mainstream. A Smithian ancestry is more plausible for Neoliberal ideologists. These last have contributed, with their theories and the worldwide connivance of governments and the media, to the strengthening of a privileged class of financial rentiers and to the increase in number of a set of lower classes. The luxury of the former push the members of the latter to wish to leave their unsatisfactory economic situation, thus inevitably contributing to the wealth of the nation just like in Smith’s invisible hand. The deception of private initiative is given them as the only chance for an improvement that is individual and not collective, and must be very aleatory, lest the social, economic and institutional setup is subverted. A wide set of controversies on the foundations of mainstream economics and of Marxist political economy is entailed, which have been so far eluded in the history of economic thought and in economic history. It is time to start them.
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