Tony Brewer wrote: >Who is misquoting Smith? > >Certainly, Smith did not have a concept of an >invisible hand - it was a striking phrase that >he used once per book for emphasis, no more. But >the way he used it is not as John C. Medaille >suggests. The TMS invisible hand is about the >distribution of food, not goods in general. The >rich landlord has command of huge amounts of >food, but cannot eat it all himself. Instead he >spends on luxuries thereby enabling his servants >and the producers of 'baubles and trinkets' to >earn and eat. Smith did not give up this >argument but kept it in the final edition of >TMS, long after the writing of the WN. The WN >repeats essentially the same argument (Glasgow >ed, pp. 180-1), but switches the phrase, >'invisible hand' to a different (but not >conflicting) argument. The WN invisible hand is >not only, not even mainly, about home investment >v investment abroad. Smith claimed that >investing where the return is highest >distributes capital between activities in a way >which maximizes the annual revenue of society. > >This is not, of course, the same as the first >theorem of modern welfare economics, but it is >not as inconsequential as John tries to make out. Here is the passage from TMS. I leave the interpretation to others: [The rich] consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species .In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for .[1] [1] Adam Smith, The Theory of Moral Sentiments, 6th ed., The Conservative Leadership Series (Washington, D.C.: Regnery Publishing Co., 1997), IV.I p. 249. John C. M?daille