Peter, I suppose that it does expand the scope of the invisible hand 
beyond what many are used to. But, although the Ricardian law of 
association came later, I believe that Smith had a rough 
understanding of how individuals gain from the expansion of the realm 
of the division of labor and specialization. As I recall, a 
particularly important point made by Smith is that progress is due 
more to nurture than to nature, or something to that effect.

Ricardian Law:
http://mises.org/humanaction/chap8sec4.asp

The question, I guess, is whether he had this in mind when he wrote 
of the businessperson's allocation of "capital." Or, would it be more 
accurate to say that Smith wrote about so many things that making a 
connection between the two ideas (invisible hand and growth through 
the division of labor and specialization) is unwarranted. I can't 
answer this question. But it seems to me that if we are today writing 
about the legacy of the classical economists, the connection (for the 
classical economists as a group) is indeed reasonable. At the same 
time, we must attribute those same economists with the use of the now 
discredited labor theory of value.


Mohammad, as usual, there is much to ponder in your lengthy post. If 
I understand you correctly, you implicitly assume that I was 
providing a prescription for a society's well being or, at least, for 
an economy that benefits "the people." My aim was not so broad.  I 
agree with some of your points and disagree with others regarding the 
implications of what the various authors you mention maintained. 
I  agree that the concept of the entrepreneur and credit are crucial 
in determining how and whether "the people" benefit from market 
interaction. These concepts were invented and applied mostly during 
what one might accurately describe as the early neoclassical period 
in the history of economic thought.

I take it that you have applied your idea of "seigniorage" to the 
global financial crisis. Do you have a research paper, or other 
writing, on this issue? I am not familiar with the use of this term 
in the context you propose.

I use the term "diversity of human capital" as the modern equivalent 
to "division of labor and specialization." The expansion of these 
occurs through the expansion of markets. A good source for this view 
of Smith is
Young, Allyn A. (1928) "Increasing Returns and Economic Progress." 
Economic Journal. 38 (152): 527-542.
http://rds.yahoo.com/_ylt=A0geuy8jZ6pKp5YAMUNXNyoA;_ylu=X3oDMTEyYTFhZjM1BHNlYwNzcgRwb3MDNARjb2xvA2FjMgR2dGlkA00wMDFfODQ-/SIG=12rbej6va/EXP=1252767907/**http%3a//www.uio.no/studier/emner/sv/oekonomi/ECON4915/v05/AllynYoung.pdf


Pat Gunning