Adam Smith’s invisible hand vs. Barack
Obama’s helping hand
By
Mark
Skousen 10:28 AM 03/09/2011
Today marks the anniversary of the publication of Adam Smith’s most
famous work, The
Wealth of
Nations, which was published on March 9, 1776. It’s one of my
favorite books.
The Wealth of Nations is a declaration of economic independence,
and is just as important as Thomas Jefferson’s declaration of political
independence. It is no coincidence that they were both published in 1776,
the Annus Mirabilis of the Enlightenment.
In his fat magnum opus (over 1,000 pages), Adam Smith declared war on
government intervention in the economy, and put on paper a universal
formula for prosperity that would revolutionize economics and
international trade.
It promised a new world a world of abundant wealth, riches beyond the
accumulation of gold and silver and not just for the rich, but for the
common man and the poor.
Adam Smith’s solution? Give people their freedom! His “system of natural
liberty” would liberate everyone from 16-hour-a-day jobs, subsistence
wages, and forty-year life spans. He declared: “To prohibit a great
people from making all that they can . . . or from employing their
industry in the way that they judge most advantageous, is a manifest
violation of the most sacred rights of mankind.”
His formula? It was very simple: “Little else is required to carry a
state to the highest degree of opulence from the lowest barbarism, but
peace, easy taxes, [sound money], and a tolerable administration of
justice.” That’s all we need for prosperity in this country four simple
things: peace, easy taxes, sound money, and a justice system that works.
It’s not that hard, President
Obama!
Yet, do we have peace? Not in the Middle East.
Do we have easy taxes? Only if you don’t make any money or are on
welfare.
Do we have sound money? The dollar and the price of gold say
“no.”
Do we have a tolerable administration of justice? Not enough.
In short, we have a long way to go before we can declare victory for
freedom and prosperity in this country.
Adam Smith’s symbol of
free-market
capitalism was a beautiful metaphor: the invisible hand. The idea is that
when an individual is given the freedom to pursue his own interests, “he
is led by an invisible hand to promote that of the society.”
Oddly enough, the “invisible hand” symbol is mentioned only once in the
entire 1,000 pages of Adam Smith’s tome, and only once in his earlier
work, “The Theory of Moral Sentiments” (1759). Critics have jumped on
this fact and concluded that the much-touted symbol of free-market
capitalism (the invisible hand) was in reality a marginal concept to
Smith. In fact, they argue, Smith was really more of a social
democrat and radical
egalitarian who believed more in a “helping hand” to the poor than an
“invisible hand” to the capitalists.
But now George Mason University’s Daniel Klein has made a fascinating
discovery: Smith placed his references to the invisible hand in the dead
center of both books. Professor Klein argues that Smith did this
deliberately because the invisible hand doctrine was central to his work.
Adam Smith has finally revealed his (invisible) hand!
I’ve written
an article for the Foundation for Economic Education on Dan Klein’s
discovery about the “deliberate centrality” of the invisible hand in
Smith’s work, and what it all means. It will appear in print in the June
issue of “The Freeman.”
On a personal note, March 9th is also the publication date of
“
The Making of Modern Economics” (March 9, 2001). It is not a
coincidence. Adam Smith is the heroic figure of the book, which is now in
its second edition. Last year it won the Choice Book Award for
Outstanding Academic Title. The book is available in hardback, paperback,
Kindle, and audio book and translated into five languages.
I’m happy to announce that Professor Klein has accepted my invitation to
participate in a debate at this year’s big show,
FreedomFest (July 14-16, Las
Vegas), on the subject: “Libertarian, Conservative, or Radical
Egalitarian: Will the Real Adam Smith Please Stand Up?” Hope you will
join us for this annual event (it’s the libertarian version of
CPAC).
Long live free-market capitalism.
Mark Skousen is the editor of Forecasts & Strategies, and producer
of FreedomFest, the world’s
largest gathering of free minds.
http://dailycaller.com/2011/03/09/adam-smiths-invisible-hand-vs-barack-obamas-helping-hand/#ixzz1GDZ4RDu2
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