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From:
[log in to unmask] (Gavin Kennedy)
Date:
Sun Mar 9 11:20:35 2008
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'Holy moley!!  Out go the invisible hand.' (Pat Gunning)

If that's all that is bothering Pat Gunning, he should relax.  The invisible
hand was never 'in'.   It is a modern 20th-century campus myth that
attributes the invisible hand of markets to Adam Smith despite him never
crediting the metaphor with anything like the mysterious powers that it has
been given by, among others, three Nobel prize winners, most of our
profession and those they influence in the media.

Like the Emperor's Clothes, it is a fable agreed upon, especially when it is
linked to markets, which Adam Smith certainly never did.  It is not
mentioned in Books I and II of Wealth Of Nations where Smith discusses how
markets work; he mentioned it once in Book IV in relation to risk-avoidance
behaviour, after clearly describing how traders reacted to the risks of
foreign trade - they invested locally instead, and because the sum of the
parts (locally invested) added to a greater total local investment, the
result was, er, greater total local investment.   This is about arithmetic,
not theories, concepts, paradigms, mystical body parts, or divine
interventions.

Gavin Kennedy

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