"That to these causes, thus necessarily proceeding from this great principle, we are to ascribe in particular both the opulence and prosperity of our own nation, and the necessary diffusion of the arts, manners, language, and race, with which they are connected, and in which they are embodied, over the remotest regions of the globe. That thus, although men in marrying seek only their own good, they nevertheless adopt that course which is most to the advantage of society; and here too , as in many other instances, are led by an invisible hand to promote an end which was no part of their intention. That, therefore, as the revenue and power of a nation can only increase as its population increases, and as the increase of population tends to give a beginning to every useful art, and to carry it to the highest perfection, legislators act a very absurd and culpable part in attempting, in any instance to restrain it , or to check what is undoubtedly the natural, and apparently the most beneficial course of events."--John Rae (1834) Statement of Some New Principles on the Subject of Political Economy,
It's well known, at least since 1971, to students of Adam Smith that Adam Smith uses the phrase, 'invisible hand' three times in his oeuvre.+ In print Smith first used it in 1759 in Part IV, Chapter 1 The Theory of Moral Sentiments (hereafter TMS; see here). He then used it in 1776 in Book IV of An Inquiry Into the Nature and Causes of The Wealth of Nations (hereafter WN; see here). And the third time it appeared in print was in 1795, in his (posthumously published) Essays on Philosophical Subjects (hereafter EPS), in his essay on the "History of Astronomy" (see here). Almost certainly the latter essay was, at least partially, composed first.
Each of Smith's three uses occur in rhetorically complex passages that have different explanatory purposes and different implied targets. In WN Smith is quite explicit that he is criticizing what he calls the 'mercantile system.' But the point and target of the passage in TMS is disputed. Finally, in EPS the 'invisible hand' is explicitly attributed to 'Jupiter,' but this is done by Smith and explicitly not by the heathen polytheists that he is describing! Unsurprisingly, this state of affairs has not generated consensus among scholars about what Smith means by 'invisible hand' when he uses it. (The Wikipedia entry gives a tasting of the diversity of approaches to it.) Somewhat annoyingly, when we look at eighteenth century uses of 'invisible hand' that would have been familiar to Smith we find no uniform use that can help settle this case.
As an aside, in chapter 10 of my book, I have offered a detailed analysis of Smith's three uses, and much to my own surprise I offer a unified interpretation of all three, which (on my view) describes a very particular kind of (social) mechanism: any given iteration of such a mechanism is a relatively short-term process in which the agent produces unintended and to him/her unknown consequences. Crucially, the consequences are, in principle, knowable to the right kind of observer at the time (either because of theory or by accumulated common sense). And I contrast such invisible hand mechanisms to the much more dominant model of large-scale unintended consequences that Smith deploys much more frequently throughout his work (and that Mandeville and Ferguson also made famous). For a careful and generous summary of my views, I happily refer you to one of the doyens of Adam Smith scholarship, Jeffrey Young who wrote a sympathetic review of these issues here. But despite Young's endorsement of my position, I don't expect other scholars to fall into line.*
In cases like this, it can be highly instructive to look at the reception of an author. I expect Glory M. Liu excellent and illuminating Adam Smith's America: How a Scottish Philosopher Became an Icon of American Capitalism to provoke more reception studies of Smith.
When we do so for the invisible hand we are immediately struck by a quite stunning fact. To the best of my knowledge, none of Smith's early readers ever mention the invisible hand in print! It seems to have inspired no commentary or reflection. I suspect this is what led the distinguished scholar, Emma Rothschild, to treat the 'invisible hand' in deflationary manner as a kind of ironic joke by Smith originally in a famous (1994) article. (You could ask her if you doubt this!) For, she writes, "The evidence for this view is indirect. Smith makes no other mention of the invisible hand; it is interesting that commentators on his work, too, mentioned it only infrequently prior to the 20th century." (319)
Now, when Rothschild wrote that sentence, the internet was in its infancy. And that claim was highly plausible, and if you do a Ngram search, you'll see that only after 1917 does the phrase 'invisible hand' become influential. But when we start digging into the databases, we discover it's not quite right. Between 1810-184o there is definite interest in an 'invisible hand' (see here). Part of that bump is the publication, and re-publication of Invisible Hand: A Tale by W. Clayton. I have found little about this book or author anyway. (It's charming by the way.) But most of that bump reflects the republication (with commentaries) of Smith's works and the use of 'invisible hand' in theological works of some kind or another.
However, the coupling of "Adam Smith" with the invisible hand only starts to pick up in the 1840s. We see this first in French from 1845 onward where, the economist Eugène Daire (1798-1847) does this casually in a book review of a book by Ferdinand Duran (Des tendances pacifiques de la société européenne et du rôle des armées dans l'avenir). In Daire, the invisible hand is a mechanism that, in the presence of the possibility of profit, connects the interests of individuals with that of society. This use fits the larger widespread, 19th century liberal view of the (potential) harmony of interests. (In my book I deny this is Smith's own view; short version, the interests of merchants and those of workers & landholders are opposed.) I return to this below.
In 1848 a work attributed to the author of Theodore appeared. Theodore was a young adult crusader story written by Barbara Hofland, who died in 1844. The 1848 work is The Island of Liberty; Or Equality and Community and is said to be written during the Monmouthshire Riots of 1839-1840. I think this refers to what is known as the Newport Rising. The Island of Liberty is a substantial work (and I am somewhat sad I have found no literature on it), and fits no genre easily: it is a mixture of utopian novel, adventure story, and didactism. It advocates, inter alia, colonization for Malthusian reasons, and it has a somewhat feminist tendency. Smith's TMS supplies the epigraphs of the first two chapter headings, and the invisible hand passage is found at the start of the first. (And, while this is quite tentative, it seems Hofland, if it is really her, that it signals with Smith that the rich trample on the poor and that -- although I doubt Smith really endorses this -- providence will guide us.)
That same year, in 1848, the American, Calvin Cotton, a professor of "public economy" at Trinity College, in a substantial treatise, The Public Economy of the United States, quotes the WN's invisible hand passage while using Smith's principles to argue for protectionism! To be sure, he makes clear that "Smith and his followers" all claim that protectionism is a tax (and so to be rejected). But the invisible hand plays no role in Cotton's argument. (For wider context of Smith's role in the debate over protectionism you should read Liu's book!) But after 1850, it becomes not uncommon to couple Adam Smith and the invisible hand (go through here) in an economic context, although in Germany this occurs only after 1870. And then the invisible hand often operates in the marketplace or through markets. I don't mean to suggest there is a single late 19th century interpretation of the invisible hand. On the contrary, if you trace out all the uses you see a proliferation of meanings and interpretations!
In reflecting on all these data points, I was struck by two thoughts. First, for close to a century Smith was treated and read (quite widely) without an immediate association with the invisible hand. That's a very different Smith we have now! Second, I was puzzled by the casualness of Daire's use. For he clearly seems to assume that his audience (he is writing in a political economy journal) is familiar with his move. Now, this is not strange, of course. For example, in 1843, WN was republished in a very useful edition in French because it collected the notes of many important commentators on Smith. It would be natural for Daire to assume that Smith's ideas were familiar to his audience. Even so, the natural seeming coupling in Daire bugged me.
Now, in 1834, John Rae published a quite remarkable book, Statement of Some New Principles on the Subject of Political Economy. This John Rae (who is writing in Canada!) is not the same (as I belatedly realized) as the biographer of Smith (Life of Adam Smith (1895)). Now Rae's Statement is quite critical of Adam Smith. To the best of my knowledge this book was not very well known in the 19th century, but was rediscovered by the end of the nineteenth and then had quite an important role to play in both the social theory of economics (in what sociology) and what is now known as endogenous growth theory. (So, for example, I had hoped to find Cotton cite Rae!)
But it was not wholly unknown because in a draft letter by J.S. Mill assures Rae that " I have made more use of your treatise than you appear to have been informed of, having quoted largely from it, especially from your discussion of the circumstances which influence the " effective desire of accumulation ", a point which you appear to me to have treated better than it had ever been treated before." (1854)
Now, it's absolutely central to Rae's interpretation of Smith that in Smith there is an "exact identity of ends which nations and individuals pursue." This axiom (my term) gives Smith's system its coherence and unity, according to Rae. And Rae had introduced this claim by, rather briefly, quoting Smith's WN passage with the invisible hand. But after articulating this axiom which Rae rejects and attributes to Smith and his followers, Rae writes, "It might, perhaps, in support of such a view of the subject, be said," and then follow a whole number of quotations. Some of these are familiar passages (from Virgil), but others I have been unable to identify a source.
In particular, the passage quoted at the top of this post, which Rae puts in quote marks (because, recall, "in support of such a view [as Smith's] of the subject, be said,") seems to be Rae's own invention! (I welcome refutations of this claim, even if it would detract from my story.) Now, what's neat about the passage is that it is a creative synthesis of the TMS and WN passages of the invisible hand, and these, in turn, synthesized with Malthus (who is, in many respects, an insightful Smithian--as Ross Emmett noted back in 2020). And while I think it is a false interpretation of Smith, what Rae is right about, and this is prescient, this the dominant account of nineteenth century liberalism (especially in the context of population ethics and political economy) and this, in turn, often gets backwardly projected onto Smith in the nineteenth century and by later scholars of the nineteenth century!** Now, I wouldn't bet that Daire had read Rae (such providence probably does not exist), but I think Rae's comments helps explain why a decade later these kind of ideas are merged together without it worth remarking on.
+Interestingly enough, in his 1893 Philosophy and Political Economy in Some of Their Historical Relations, James Bonar had already pointed this out and offered an interpretation of all three invisible hands in light of each other (see here). Macfie does not cite Bonar, but the work has been studied by historians of economics since. (So I am not claiming originality here.)
*One may ask, why not? For two reasons: first, Smith's texts probably underdetermine any interpretation. Second, lots of widely popular readings of Smith have relied on (what I take to be opportunistic) specific interpretations of Smith.
**While Rae does not use 'liberalism', he does use 'liberal' to refer to the Smith and his followers.
Comments