Adam Smith's Invisible Hand Argument

Adam Smith's Invisible Hand Argument

Smith defined liberalism as a society that regulates itself through the market, individuals serving the social good by pursuing self-interest, with the state intervening only minimally: The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from custom, habit, and education. When they came into the world, they were, perhaps, very much alike, and neither their parents nor play-fellows could perceive any remarkable difference. About that age, or soon after, they come to be employed in very different occupations. The difference of talents comes then to be taken notice of, and widens by degrees, till at last the vanity of the philosopher is willing to acknowledge scarce any resemblance. But without the disposition to truck, barter and exchange, every man must have procured to himself every necessary and conveniency of life which he wanted. All must have had the same duties to perform, and the same work to do … As it is this disposition which forms that difference of talents…so it is this same disposition that renders the difference useful … Among men, the most dissimilar geniuses are of use to one another; the different produces of their respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into common stock, where every man may purchase whatever part of the produce of other men's talents he has occasion for. [1]

There have to be two economies - one for the big corporations and one for the small businesses.  Like their own Chamber of Commerce the small manufacturers need to pull together and help each other, and become - like Adam Smith called it - 'the domestic society.'

The Republicans like to drag out Adam Smith's “Invisible Hand,” as the guiding principle behind their greed.  Here it is, the part they quote extensively:

…he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

In other words, by trying to make himself as profitable as possible, the supposedly selfish and greedy person is actually doing his society a great favor - even though the society isn't part of his thinking.  It sounds great, except notice that 'the society' is not mentioned in that incomplete part.  This allows the Republicans slash Conservatives to let greed rule their thinking and be as selfish as possible, following any precept that funnels money into their pockets - even if it is at the expense of the prosperity of their own society.[2]

The entirety means that the individual realizes it is better to contribute to the industry of his own country - that THAT is where his long term prosperity will ...