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Societies for the History of Economics

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From:
"Duggan, Marie" <[log in to unmask]>
Reply To:
Societies for the History of Economics <[log in to unmask]>
Date:
Fri, 11 Sep 2009 16:15:08 -0400
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Ok, it is true that Smith first mentions the invisible hand as meaning
automatic "trickle down" of wealth from the successful to their servants
and suppliers.  But he also has the discussion of the gravitational pull
of natural price on market price due to imbalances between the forces of
supply and demand in the Wealth of Nations.  In short, although people
seem to have inaccurately used Smith's terminology, people are correct
in thinking of him as the person who wrote about automatic
self-correcting markets, with a hefty role for consumer demand on the
actions of firms.

As for Tony Aspromourgus' idea that Smith argued for unintended
consequences even if they were bad, it seems to me Smith had a more rosy
view during his discussion of the market price and natural price.  He
was arguing that the unintended consequences were going to move firms to
provide what consumers wanted, and for prices that might be high to come
back down again.  I'm not arguing that Smith always had a rosy view of
capitalism, I know he did not.  But the market price-natural price
section (which it seems to me is what people mean by his invisible hand
section) underlies his fundamental optimism regarding markets.

Marie Duggan

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