------ EH.NET BOOK REVIEW ------
Title: Erasing the Invisible Hand: Essays on an Elusive and Misused
Concept in Economics

Published by EH.Net (February 2012)

Warren J. Samuels (assisted by Marianne F. Johnston and William H.
Perry), Erasing the Invisible Hand: Essays on an Elusive and Misused
Concept in Economics. New York: Cambridge University Press, 2011.
xxviii + 329 pp. $95 (hardcover) ISBN: 978-0-521-51725-6.

Reviewed for EH.Net by Gavin Kennedy, Edinburgh Business School,
Heriot-Watt University, Edinburgh (Professor Emeritus).

Warren Samuels was an American historian of economic thought located
at the top of its first division.  He started work for this book in
1983 and took 28 years to complete.   This was no rushed job and it
shows in his meticulous and, therefore, authoritative scholarly
account of the now widely quoted “invisible hand” (pp. 20-26). Smith
did not “coin” the phrase. It was prevalent in classical times from
Aeschylus through to St Augustine, and later, in numerous seventeenth-
and eighteenth-century theological texts, sermons, plays
(Shakespeare), poems, and novels (Defoe, Walpole), and in political
rhetoric (George Washington).

Adam Smith used it only twice as a metaphor in his Theory of Moral
Sentiments (1759) and Wealth of Nations (1776), and once in his
History of Astronomy (1795, posthumous). After Smith, there was an
absence of mentions of the invisible hand metaphor among economists to
1875 and near silence thereafter until it was rediscovered and
re-invented into the “founding concept” of modern economics from the
1940s.

Samuels reports Amazon listing 33,888 books discussing the invisible
hand (2009). The annual rate of mentions rose from “very low”
(1816-1938), but the decade (1990-1999) recorded eight times the level
of mentions between 1942-1974 and nearly 20 percent higher than for
1980-89 (p.18-19). In consequence, the invisible hand is now widely
believed to be significant, and it has spread to other disciplines.
Samuels dissects forensically this phenomenon of belief, though he
understates the unique role of Paul Samuelson (from 1948) in
popularizing modern notions of Adam Smith’s “invisible hand.”

Samuels discusses Adam Smith’s supposed use of the invisible hand in
his political economy.  Essay 3 examines the numerous modern
identities of the invisible hand and Essay 4 discusses Smith’s
argument that philosophical ideas help to “soothe the imagination.”
Essay 5 examines conceptual problems associated with “naturalism” and
“supernaturalism” in philosophy.  Essay 6 examines the invisible hand
as a “figure of speech,” which for me is Samuels’ most disappointing
essay.  Samuels continues with his examination of the invisible hand
as “Knowledge’ (Essay 7) within the economic role of government, while
Essay 8 addresses misconceptions that Smith was a doctrinaire advocate
of “laissez-faire.”  Samuels continues in Essay 9 on claims that
Smith’s ideas led to the welfare theorem.  Samuels’ conclusions in
Essay 10 are best summarized by his question: “what is left of the
invisible hand” (p. 293) and by his answer: “There is no invisible
hand as that term is used in economics.  Its continued use must at its
base constitute an embarrassment.  Almost all uses of the term add
nothing to substantive knowledge” (pp. 290-91).

There are two parts to the enigma of “an invisible hand.”  There was
Adam Smith’s use of the invisible hand metaphor (what did Smith mean?)
and second, there is how modern economists use the same figure of
speech (what do they mean?). Samuels’ otherwise excellent and thorough
account produces an ambiguous answer. He says that his “account
clearly does not conclude the conventional view(s) of the invisible
hand is (are) wrong, in whole or in part” (p. 295). However,
“Conventional views” may well be true, if judged strictly as beliefs.
Simultaneously and separately, beliefs in attributions to Adam Smith
that assert his complicity in those conventional views are false.

Samuels’ problem is sourced in Essay 6 on “uncertain language.”  He
identifies “one dozen major responses” to the question of “what is the
invisible hand?” plus “some four dozen identities” (p 135).  However,
his analysis of the role of metaphors is particularly disappointing
because, while he provides an authoritative survey of the modern use
of metaphors and associated figures of speech, he does not acknowledge
Adam Smith’s own teaching on metaphors. Instead, Samuels sources his
“conclusions” from eight twentieth-century linguistic authorities
(from 1979 and 1993) and Samuel Johnson’s Dictionary (1755), of which
Smith published a scathing critical review. Samuels makes no mention
in the text nor in the bibliography of surely the prime witness as to
what Smith meant by “an invisible hand,” that is, Adam Smith himself!

Smith discussed the role of metaphors clearly in his “Lectures on
Rhetoric and Belles Lettres” ([1762] 1983): “Now it is evident that
none of these metaphors can have any beauty unless it be so adapted
that it gives the due strength of expression to the object to be
described and at the same time does this in a more striking and
interesting manner” (Smith, LRBL, Lecture 6, p. 29; see also Oxford
English Dictionary, 1983).

Smith used the metaphor of “an invisible hand” to “describe in a more
striking and interesting manner” their particular objects: it was the
absolute mutual dependence of the “unfeeling landlord” on his serfs,
servants, and tenants (‘no food, no labour’), and their mutual
dependence on him (‘no labour, no food’), which mutual dependence led
him to share his crops with them, unintentionally benefiting humanity
through the “propagation of the species” (Theory Moral Sentiments,
1759, p. 185); and it was the insecurity felt by some, but not all,
merchant traders, that led them to prefer to invest in “domestick
industry” (mentioned four times), rather than risk the “foreign trade
of consumption” (Wealth Of Nations, 1776, p. 456), also
unintentionally benefiting society by adding to domestic revenue and
employment.  Smith’s use (History of Astronomy, 1795, p. 49) of the
“invisible hand of Jupiter” simply states the pagan beliefs of Romans
about their god, Jupiter, whom they believed (but never witnessed)
cast his lightning bolts at humans.   In all three cases, it is
evident that for Smith the “invisible hand” does not exist; it is an
imaginary figure of speech and an imagined pagan belief.  We cannot
see, but we can imagine; we may choose to believe or not to believe.
The “invisible hand” “corresponds to nothing in reality,” it
“contributes nothing to knowledge,” and is a “distraction and a
diversion, (Samuels, p. 146).

Samuels simultaneously announces that “designating something – for
example, the market, the price-mechanism, an entrepreneur, or anything
else” – as the function ostensibly performed by something called “the
invisible hand” literally adds nothing.

Warren Samuels has written an authoritative, detailed and mainly
original contribution to scholarship, ably assisted by his
collaborators, Marianne Johnston and William Perry.

Gavin Kennedy, professor emeritus, Heriot-Watt University, Edinburgh
([log in to unmask]), is the author of Adam Smith: A Moral Philosopher
and His Political Economy, second edition, (Palgrave, 2010) and
www.adamsmithslostlegacy.blogspot.com/

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Geographic Location: General, International, or Comparative
Subject: History of Economic Thought; Methodology
Time: 18th Century, 20th Century: WWII and post-WWII