The Myth of the Invisible Hand – A View from the Trenches

Abstract

This paper discusses the contrast between the near zero notice taken by Adam Smith’s contemporaries of his use of the “invisible-hand” metaphor, followed by the virtual absence of any notice of it for a just short of a century after his death in 1790 until it went “viral” following Paul Samuelson’s Economics textbook after 1948. An oral tradition at Cambridge discussed it from 1874 (Maitland), but until A. C. Pigou’s “Economics of Welfare,” it remained unrecorded in print. A summary of the post-1940s interest in a modern version of Adam Smith’s use of the now famous metaphor is discussed (Warren Samuels, 2011) and contrasted with Adam Smith’s teaching of the role of metaphors in his Rhetoric Lectures (1762).

Keywords: Adam Smith, invisible-hand, Moral Sentiments and Wealth of Nations, metaphors and their objects

JEL Classification: A13, B0, B1