Adam Smith and the invisible hand: From metaphor to myth

Gavin Kennedy

    Research output: Contribution to journalArticle

    27 Citations (Scopus)

    Abstract

    Adam Smith and the "invisible hand" are nearly synonymous in modern economic thinking. Adam Smith is strongly associated with the invisible hand, understood as a general rule that people in realising their self-interests unintentionally benefit the public good. The attribution to Smith is challengeable. Adam Smith's use of the metaphor was much more modest; it was re-invented in the 1930s and 1940s onwards to bolster mathematical treatments of capitalism (Samuelson, Friedman) and to support innovative analysis by associating the metaphor with "spontaneous order" (Hayek). The effect has been to ignore insightful explanations about how markets function as a process in favour of semi-mystical beliefs in imagined outcomes, wrapped in an isolated 18th-century literary metaphor, which does not explain anything.

    Original languageEnglish
    Pages (from-to)239-263
    Number of pages25
    JournalEcon Journal Watch
    Volume6
    Issue number2
    Publication statusPublished - May 2009

    Keywords

    • Adam Smith
    • Invisible hand
    • Metaphor

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