Invisible Hand Explanations

I argue that Adam Smith does more than providing an account of competitive behavior loosely linked to an underlying psychology since the joint between the complex psychology of The Theory of Moral Sentiments and the invisible hand pages in The Wealth of Nations explains why some of the basest affections, greed and ambition, prevail over other tendencies in certain social groups, namely merchants and manufacturers, in a commercial and urban society.

There is no room for the concept of need in the prevailing neoclassical school of economics. Not so, however, in classical political economy. Through close analysis in this paper, I wish to trace the concept’s prominence in Adam Smith’s thought and to fine-tune its definitional aspects. The thrust of Smith’s argument is to delineate the mechanism via which the needs of the poorest in society are satisfied. Grounded in an understanding of need as limited and exhaustive rather than infinite, like (...) desire or preference, his theory is one of affluence rather than scarcity. But his justification of commercial society (from which the neoclassical school only lifts the conclusion) rests on becoming actually satisfied that these needs are, indeed, satisfied—an erroneous belief (at least according to the terms of Smith’s own definition) and an internal contradiction in the development of his argument, occasioned, I wish to suggest, by certain colonialist discourses. Finally, Smith’s ontology of need, as reconstructed here, corresponds to similar enquiries recently undertaken in philosophy and in some heterodox schools of economics. (shrink)

(Expected) adverse effects of the ‘ICT Revolution’ on work and opportunities for individuals to use and develop their capacities give a new impetus to the debate on the societal implications of technology and raise questions regarding the ‘responsibility’ of research and innovation (RRI) and the possibility of achieving ‘inclusive and sustainable society’. However, missing in this debate is an examination of a possible conflict between the quest for ‘inclusive and sustainable society’ and conventional economic principles guiding capital allocation (including the (...) funding of research and innovation). We propose that such conflict can be resolved by re-examining the nature and purpose of capital, and by recognising mainstream economics’ utilitarian foundations as an unduly restrictive subset of a wider Aristotelian understanding of choice. (shrink)

One of Darwin’s purposes in writing The Origin of Species was to rebut the doctrine of separate creations. Moreover, the argument he was chiefly concerned with—which was both his target and the model of his own argument—was the familiar argument from design.

How Can Invisible Hands Explain?The article presents a survey of what is meant in the social sciences by an "invisible hand explanation", dealing in special with the ideas of Bernard Mandeville, Adam Smith, Carl Menger, Friedrich August von Hayek, Robert Nozick and Edna Ullmann-Margalit, and evaluates whether these explanations meet the standards of sound scientific arguments. The answer is affirmative with two different kinds of invisible hand explanations (IHE), the "causal-mechanical"-IHE and the "functional-evolutionary"-IHE.

Adam Smith's metaphor of the "invisible hand" and its analogue in classical physics are investigated in detail. Smith's analogue was the mechanics of the solar system. What makes the analogy fail are not the idealisations in the caricature-like model of the rational economic man . The main problem rather is that the metaphor does not employ the correct analogue, which belongs to thermodynamics and statistics. In the simplest macro-economic model, the business cycle has the same formal structure as the heat (...) flow between two heat reservoirs and a business cycle of growing efficiency works like a refrigerator: it pumps money from the poor to the rich. More complicated models do not give a friendlier image. Due to technological push, an economic system behaves like a thermodynamic system far from the equilibrium, showing chaotic behaviour and developing into unpredictable states. (shrink)

David Hull accounts for the success of science in terms of an invisible hand mechanism, arguing that it is difficult to reconcile scientists' self-interestedness or their desire for recognition with traditional philosophical explanations for the success of science. I argue that we have less reason to invoke an invisible hand mechanism to explain the success of science than Hull implies, and that many of the practices and institutions constitutive of science are intentionally designed by scientists with an eye to realizing (...) the very goals that Hull believes need to be explained by reference to an invisible hand mechanism. Thus, I reduce the scope of Hull's invisible hand explanation and supplement it by appealing to a hidden hand explanation. (shrink)

The article presents a survey of what is meant in the social sciences by an "invisible hand explanation", dealing in special with the ideas of Bernard Mandeville, Adam Smith, Carl Menger, Friedrich August von Hayek, Robert Nozick and Edna Ullmann-Margalit, and evaluates whether these explanations meet the standards of sound scientific arguments. The answer is affirmative with two different kinds of invisible hand explanations (IHE), the "causal-mechanical"-IHE and the "functional-evolutionary"-IHE.

This book examines the use, principally in economics, of the concept of the invisible hand, centering on Adam Smith. It interprets the concept as ideology, knowledge, and a linguistic phenomenon. It shows how the principal Chicago School interpretation misperceives and distorts what Smith believed on the economic role of government. The essays further show how Smith was silent as to his intended meaning, using the term to set minds at rest; how the claim that the invisible hand is the foundational (...) concept of economics is repudiated by numerous leading economic theorists; that several dozen identities given the invisible hand renders the term ambiguous and inconclusive; that no such thing as an invisible hand exists; and that calling something an invisible hand adds nothing to knowledge. Finally, the essays show that the leading doctrines purporting to claim an invisible hand for the case for capitalism cannot invoke the term but that other nonnormative invisible hand processes are still useful tools. (shrink)

A descriptive norm is a behavioral rule that individuals follow when their empirical expectations of others following the same rule are met. We aim to provide an account of the emergence of descriptive norms by first looking at a simple case, that of the standing ovation. We examine the structure of a standing ovation, and show it can be generalized to describe the emergence of a wide range of descriptive norms.

Własność prywatna nie jest żadnym naturalnym uprawnieniem, ale prawną konwencją zdefiniowaną przez system podatkowy. Stopień ingerencji w rzekomo naturalne prawo własności nie może być podstawą oceniania systemów podatkowych, bo sama własność jest wytworem takich systemów. Podatki nie odbierają nam własności, tylko umożliwiają jej istnienie.

One of the central tenets of mainstream economics is Adam Smith's proposition that, given certain conditions, self-interested behavior by individuals leads them to the social good, almost as if orchestrated by an invisible hand. This deep insight has, over the past two centuries, been taken out of context, contorted, and used as the cornerstone of free-market orthodoxy. In Beyond the Invisible Hand, Kaushik Basu argues that mainstream economics and its conservative popularizers have misrepresented Smith's insight and hampered our understanding of (...) how economies function, why some economies fail and some succeed, and what the nature and role of state intervention might be. Comparing this view of the invisible hand with the vision described by Kafka--in which individuals pursuing their atomistic interests, devoid of moral compunction, end up creating a world that is mean and miserable--Basu argues for collective action and the need to shift our focus from the efficient society to one that is also fair. Using analytic tools from mainstream economics, the book challenges some of the precepts and propositions of mainstream economics. It maintains that, by ignoring the role of culture and custom, traditional economics promotes the view that the current system is the only viable one, thereby serving the interests of those who do well by this system. Beyond the Invisible Hand challenges readers to fundamentally rethink the assumptions underlying modern economic thought and proves that a more equitable society is both possible and sustainable, and hence worth striving for. By scrutinizing Adam Smith's theory, this impassioned critique of contemporary mainstream economics debunks traditional beliefs regarding best economic practices, self-interest, and the social good. (shrink)

Reviving the Invisible Hand is an uncompromising call for a global return to a classical liberal economic order, free of interference from governments and international organizations. Arguing for a revival of the invisible hand of free international trade and global capital, eminent economist Deepak Lal vigorously defends the view that statist attempts to ameliorate the impact of markets threaten global economic progress and stability. And in an unusual move, he not only defends globalization economically, but also answers the cultural and (...) moral objections of antiglobalizers. Taking a broad cross-cultural and interdisciplinary approach, Lal argues that there are two groups opposed to globalization: cultural nationalists who oppose not capitalism but Westernization, and "new dirigistes" who oppose not Westernization but capitalism. In response, Lal contends that capitalism doesn't have to lead to Westernization, as the examples of Japan, China, and India show, and that "new dirigiste" complaints have more to do with the demoralization of their societies than with the capitalist instruments of prosperity. Lal bases his case on a historical account of the rise of capitalism and globalization in the first two liberal international economic orders: the nineteenth-century British, and the post-World War II American. Arguing that the "new dirigisme" is the thin edge of a wedge that could return the world to excessive economic intervention by states and international organizations, Lal does not shrink from controversial stands such as advocating the abolishment of these organizations and defending the existence of child labor in the Third World. (shrink)

(2013). Bringing Forth That Which is Within: How an Invisible Hand Led me to a Life That “Feels Like My Own”. World Futures: Vol. 69, The Complexity of Life and Lives of Complexity, pp. 345-358.

N. Emrah Aydinonat's account of the invisible-hand is analysed. One of the conditions for unintended social consequences is it requires that individuals' intentions are exclusively directed at the individual level. This condition is weakened in order to accommodate cases in which individuals may also aim at consequences at the social level but the model clearly depicts the invisible hand. Lehtinen's model of counterbalancing strategic votes is proposed as an example that satisfies Aydinonat's conditions, if they are modified as suggested.

Can successful science accommodate a realistic view of scientific motivation? The Received View in theory of science has a theory of scientific success but no theory of scientific motivation. Critical Science Studies has a theory of scientific motivation but denies any prospect for (epistemologically meaningful) scientific success. Neither can answer the question because both regard the question as immaterial. Arguing from the premise that an adequate theory of science needs both a theory of scientific motivation, and a theory of scientific (...) success, I make a case for seeing science as a kind of invisible-hand process. After distinguishing different and often confused conceptions of invisible-hand processes, I focus on scientific rules, treated as emergent responses to various coordination failures in the production and distribution of reliable knowledge. Scientific rules, and the means for their enforcement, constitute the invisible-hand mechanism, so that scientific rules (sometimes) induce interested scientific actors with worldly goals to make epistemically good choices. (shrink)

The notion of a spontaneous social order, an order in human affairs which operates without the intervention of any directly ordering mind, has a natural fascination for social and political theorists. This paper provides a taxonomy under which there are two broadly contrasting sorts of spontaneous social order. One is the familiar invisible hand; the other is an arrangement that we describe as the intangible hand. The paper is designed to serve two main purposes. First, to provide a pure account (...) of the invisible hand, with some indication of the varieties of invisible hand (and, indeed, backhand) available. Second, to develop and motivate the unfamiliar conception of the intangible backhand. We believe that a recognition of the availability of this latter sort of spontaneous organising mechanism — and the mechanism is implicitly recognised in many traditions — is of great importance in political theory; it is of particular importance nowadays when the usual focus is entirely on the invisible hand. (shrink)

An invisible hand seems to play an important role in science. In this paper I set out the general structure of invisible-hand explanations, counter some objections that have been raised to them, and detail the role that they play in science. The most important issue is the character of the mechanisms that are supposed to bring about invisible-hand effects.

When Adam Smith published his celebrated writings on economics and moral philosophy he famously referred to the operation of an invisible hand. Adam Smith's Political Philosophy makes visible the invisible hand by examining its significance in Smith's political philosophy and relating it to similar concepts used by other philosophers, revealing a distinctive approach to social theory that stresses the significance of the unintended consequences of human action. This book introduces greater conceptual clarity to the discussion of the invisible hand and (...) the related concept of unintended order in the work of Smith and in political theory more generally. By examining the application of spontaneous order ideas in the work of Smith, Hume, Hayek and Popper, Adam Smith's Political Philosophy traces similarities in approach and from these builds a conceptual, composite model of an invisible hand argument. While setting out a clear model of the idea of spontaneous order the book also builds the case for using the idea of spontaneous order as an explanatory social theory, with chapters on its application in the fields of science, moral philosophy, law and government. (shrink)