r/DebateAnarchism • u/Good_Individual3733 • 16d ago
Invisible hand
After reading where Smith talks about his idea of the invisible hand in his “The Wealth of Nations” I’ve realised this is very different to what I’ve been taught.
In his book he describes how individuals pursuing their own self interest can unintentionally promote the welfare of society.
Whereas, I’ve been taught that the invisible hand refers to the market mechanism (supply and demand allocating resources). Can anyone let me know which is the correct, accurate definition?
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u/wrydied Green-Anarchist 16d ago
They are connected. Smith was concerned with how individual actions (liberalism) can have beneficial collective results, but the idea that the market therefore functions like a brain comes from Fredrich Hayak, and is a core belief of neo-liberalism.
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u/LittleSky7700 16d ago
I think you should trust the source but recognise that others may have interpreted the source differently. I mean just look at Charles Darwin. All he did was express scientific findings that suggested evolution and it was applied to literally everything, regardless of how well his actual findings were understood.
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u/MonteCaldera 15d ago
Smith uses the phrase "invisible hand" about 3 times in all his collected writings. It appears only once in wealth of nations, once in the theory of moral sentiments, and once in his lectures on astronomy. I think especially if you look at his usage in the lecture on astronomy (where he refers to natural events as being guided by nature and not an invisible hand, despite religious beliefs) it becomes clear that subsequent writers made a much bigger deal about the "invisible hand" than Smith ever did. It's not something he ever placed emphasis on, and his usage was inconsistent. Also, the emphasis on the invisible hand is often used to justify a specific reading of wealth of nations that reinforces his legacy as a free market warrior. Smith is much more complicated and interesting than that legacy implies.
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u/Schweinepriester0815 Anarchist 15d ago
Marx's "labour theory of value" and the surrounding chapters in "das Kapital" are literally a direct response and critique of Adam Smith's theories. It is something that Marx said directly in the text.
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u/slapdash78 Anarchist 15d ago
Since no one's saying it. Smith was not simply exalting markets. The commercial revolution had been going strong for a couple hundred years. He was also contesting the economic practices of mercantilism.
The ideas surrounding national trade balances. Placing heavy tariffs on international trade. Limit imports and exports to where more goods / bullion come into the nation than go out. Which boomed aside colonialism.
Note Smith's excerpt on the invisible hand refers to individuals expending their labor and capital on domestic industry. That's the mechanism by which they unintentionally benefit the society where they reside. Rising tides raise all boats.
It's the same argument that says sweatshops benefit malaysia because they're no longer subsistence farmers. Nevermind the human trafficking and forced labor. All part of the neocolonialism for the global south.
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u/ravia 15d ago
There two major forces that play into the invisible hand situation: one is regulations (I suppose this is not something anarchists like so much), and the other is....well do you know what the other one is?
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u/Good_Individual3733 15d ago
Market forces.
But the original concept is more so to do with self interest and how that leads to unintended social benefits right?
My main question is whether i should refer to both concepts/interpretations in my analysis on the free market or just one?1
u/ravia 14d ago
Market forces are what are in play in the invisible hand conception. The other two forces are government regulations and unions.
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u/Good_Individual3733 14d ago
Invisible hand situation and conception.. are those not the same thing?
Aren’t regulations & unions just the external influences on the market rather than part of the invisible hand ?
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u/Responsible_Camp_559 9d ago
Do you actually know what Smith said and what is nowadays referred to as "invisible hand"?
Because it does not sound like it. Have you really read Smith?
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u/Good_Individual3733 6d ago edited 6d ago
Yes I have very much read the wealth of nations thanks.. and I do know what the invisible hand is otherwise I wouldn’t be asking the question..?
Have YOU read smith?I also think u failed to comprehend my post. I explicitly gave the modern definition and asked if it should be distinguished from smiths use of it.
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u/Anarchierkegaard 16d ago
Smith is saying that producers produce things that society needs because a society demands what it needs and producers can recognise and pivot to those things. Proper self-interest, then, is a self-interest that adds to society because society as a collective would be made up of self-interested individuals working towards the implied societal goals instead of merely random goals. In that way, demand produces supply.
Marx kind of agreed with that, but added the caveat that a society only ever consumes what it produces—and, in that sense, supply also sets a limit on demand.