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Invisible hand

From Wikipedia, the free encyclopedia

The invisible hand is a metaphor inspired by the Scottish moral philosopher Adam Smith that describes the incentives which free markets often create for self-interested people to act in the public interest.[1] Smith originally mentioned the term only in specific examples. It is used once in his Theory of Moral Sentiments when discussing the concentration of wealth. More famously, it is also used once in his Wealth of Nations, when arguing that international traders can be trusted if the incentives are right, often making it unnecessary for governments to intervene.

Twentieth century economists such as Paul Samuelson popularized the use of the term to refer more generally to unintended greater social impacts brought about by individuals acting in their own self-interest.[2][3] The idea of trade and market exchange perfectly channeling self-interest toward socially desirable ends is a central justification for newer versions of the laissez-faire economic philosophy which lie behind neoclassical economics.[4]

Smith himself described the term "invisible hand" as rhetorical and unscientific, and did not use it to refer to any general principle of economics. His argumentation against government interventions into markets were based on specific cases and were not absolute.[5] While Smith's arguments against government management of the economy were very popular, the ideas were not new. Smith himself cites earlier enlightenment thinkers such as Bernard Mandeville.[6][7][8] Smith's invisible hand argumentation may have also been influenced by Richard Cantillon and his model of the isolated estate.[9]

Because of the modern use of this term to refer to a key neoclassical assumption, a central disagreement between economic ideologies is sometimes viewed as a disagreement about how well the "invisible hand" works. For example, it is argued that tendencies that were nascent during Smith's lifetime, such as large-scale industry, finance, and advertising, now reduce its effectiveness.[10]

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Transcription

Before Adam Smith

Medieval Islamic World

Some see an early reference to the concept of the invisible hand in 7th century Arabia, where the Islamic prophet Muhammad, when asked by a merchant to fix prices of goods whose prices have shot up, responds "It is but Allah [God] Who makes the prices low and high". In other Hadith, this is worded "Allah [God] is the one Who fixes prices".[11][12] This has been interpreted as the first instance of a laissez-faire free markets approach, where not even Muhammad can interfere in the market.[13]

Adam Smith

In The Theory of Moral Sentiments (1759) and in The Wealth of Nations (1776) Adam Smith speaks of an invisible hand, never of the invisible hand.

In his early unpublished essay on The History of Astronomy (written before 1758) Smith wrote about the term invisible hand, as a type of appeal to invisible causes, which ignorant people use when trying to explain natural phenomena."Fire burns, and water refreshes; heavy bodies descend, and lighter substances fly upwards, by the necessity of their own nature; nor was the invisible hand of Jupiter ever apprehended to be employed in those matters."[14]

The Theory of Moral Sentiments

The first published appearance of the invisible hand metaphor in Smith occurs in The Theory of Moral Sentiments (1759) in Part IV, Chapter 1, where he describes a selfish landlord being led by an invisible hand to distribute his harvest to those who work for him. This passage questions the distribution of wealth and laments the fact that the poor receive the "necessities of life" after the rich have gratified "their own vain and insatiable desires". Smith uses the invisible concept to sustain a "trickle down" tendency, a type of argument against government intervention which is still popular today. The gluttony of the rich serves to feed the poor, because the poor can sell to the rich. It has been noted that in this passage Smith seems to equate the invisible hand to "Providence", implying a divine plan.[15]

The proud and unfeeling landlord views his extensive fields, and without a thought for the wants of his brethren, in imagination consumes himself the whole harvest ... [Yet] the capacity of his stomach bears no proportion to the immensity of his desires... the rest he will be obliged to distribute among those, who prepare, in the nicest manner, that little which he himself makes use of, among those who fit up the palace in which this little is to be consumed, among those who provide and keep in order all the different baubles and trinkets which are employed in the economy of greatness; all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice...The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own convenience, though the sole end which they propose from the labors of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements...They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition.

Although this passage concerns an economic topic in a broad sense, it does not concern "the invisible hand" of the free market as understood by twentieth century economists, but is instead about income distribution. There is no repeat of this argumentation in Smith's comprehensive work on economics in his later Wealth of Nations, and income distribution is not a central concern of modern neoclassical market theory.

The Wealth of Nations

The general principle that self-interested unwittingly work in the public interest in free markets, thought of today as the "invisible hand" idea, is present throughout the Wealth of Nations. However, the invisible hand is explicitly mentioned only once, in a specialized chapter in Book IV entitled Of Restraints Upon the Importation from Foreign Countries of Such Goods as Can Be Produced at Home.

In this chapter Adam Smith starts by presenting the principle of self-interest and advances the conclusion he will reach near the end of the chapter, namely that self-interest results in public welfare:

Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily leads him to prefer that employment which is most advantageous to the society.[16]

He then explains that, assuming equal or similar profits, there is a preference for employing capital in home-trade over foreign trade and the latter over carrying trade:

First, every individual endeavours to employ his capital as near home as he can, and consequently as much as he can in the support of domestic industry; provided always that he can thereby obtain the ordinary, or not a great deal less than the ordinary profits of stock. Thus, upon equal or nearly equal profits, every wholesale merchant naturally prefers the home-trade to the foreign trade of consumption, and the foreign trade of consumption to the carrying trade. [17]

This, he argues, is because the further the capital goes, the greater risk and transaction costs are.[18] He does not exclude the possibility of special situations where capital is sent to "more distant employments".[19]

So far Smith has argued that individuals act in their self-interest and that there is a preference for home-trade over foreign or carrying trade. Now, he adds that the capital employed in the home-trade necessarily boost the national industry, and increases employment and revenues for the inhabitants of the country to a larger degree than if it were employed outside; this also implies that there would be more resources for the provision of defense,[8] which serves everyone and is, as Smith puts it, "the first duty of the sovereign".[19] So not only is in the best interest of the individual to employ their capital in home-trade over the alternatives, but it is also the option most beneficial for society. It is in this way that the interest of the individual and his society align:

But a capital employed in the home-trade, it has already been shown, necessarily puts into motion a greater quantity of domestic industry, and gives revenue and employment to a greater number of the inhabitants of the country, than an equal capital employed in the foreign trade of consumption: and one employed in the foreign trade of consumption has the same advantage over an equal capital employed in the carrying trade. Upon equal, or only nearly equal profits, therefore, every individual naturally inclines to employ his capital in the manner in which it is likely to afford the greatest support to domestic industry, and to give revenue and employment to the greatest number of people of his own country.[20]

It is important to note that the preference for the domestic economy has nothing to do with nationalist ideas or biases, but rather just the home-trade preference presented previously.

Adam Smith goes on pointing out that the self-interest of individuals selects for those industries that create the greatest value. Thus, entrepreneurs will try to invest their capital in those industries where the production is expected to be of the greatest value, since they are also subject to self-interest (i.e. profit seeking):

Secondly, every individual who employs his capital in the support of domestic industry, necessarily endeavours so to direct that industry, that its produce may be of the greatest possible value. The produce of industry is what it adds to the subject or materials upon which it is employed. In proportion as the value of this produce is great or small, so will likewise be the profits of the employer. But it is only for the sake of profit that any man employs a capital in the support of industry; and he will always, therefore, endeavour to employ it in the support of that industry of which the produce is likely to be of the greatest value, or to exchange for the greatest quantity either of money or of other goods.[21]

Finally, in paragraph IX, Smith concludes the argumentation and directly uses the concept of "invisible hand"; since individuals look for the best use of their capital they will invest it in the domestic industry, which is the one that generates greatest societal benefits, and they will also direct the industries to those activities that provide the greatest value, thus every individual is employing his capital in the most optimal way as to increase society's wealth, regardless of his particular care for the public good:

But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.[22]

Essentially, the invisible hand refers to the unintended positive consequences self-interest has on the promotion of public welfare.[23][7]

It is also relevant to mention that, although the term “invisible hand” only appears explicitly here, this fundamental idea is present throughout The Wealth of Nations and the case treated in this chapter seems to be a particular example of this principle, rather than the principle itself, as noted by Smith ''is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention"

Adam Smith then goes on explaining how this "mechanism" cannot be replaced by bureaucratic commands:

What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.[24]

The reinterpretation by modern economists

The concept of the "invisible hand" is nearly always generalized beyond Smith's original uses. The phrase was not popular among economists before the twentieth century; Alfred Marshall never used it in his Principles of Economics[25] textbook and neither does William Stanley Jevons in his Theory of Political Economy.[26] Paul Samuelson cites it in his Economics textbook in 1948:

Even Adam Smith, the canny Scot whose monumental book, "The Wealth of Nations" (1776), represents the beginning of modern economics or political economy-even he was so thrilled by the recognition of an order in the economic system that he proclaimed the mystical principle of the "invisible hand": that each individual in pursuing his own selfish good was led, as if by an invisible hand, to achieve the best good of all, so that any interference with free competition by government was almost certain to be injurious. This unguarded conclusion has done almost as much harm as good in the past century and a half, especially since too often it is all that some of our leading citizens remember, 30 years later, of their college course in economics.[27]

In this interpretation, the theory is that the Invisible Hand states that if each consumer is allowed to choose freely what to buy and each producer is allowed to choose freely what to sell and how to produce it, the market will settle on a product distribution and prices that are beneficial to all the individual members of a community, and hence to the community as a whole. The reason for this is that self-interest drives actors to beneficial behavior in a case of serendipity. Efficient methods of production are adopted to maximize profits. Low prices are charged to maximize revenue through gain in market share by undercutting competitors.[citation needed] Investors invest in those industries most urgently needed to maximize returns, and withdraw capital from those less efficient in creating value. All these effects take place dynamically and automatically.[citation needed]

Since Smith's time, this concept has been further incorporated into economic theory. Léon Walras developed a four-equation general equilibrium model that concludes that individual self-interest operating in a competitive market place produces the unique conditions under which a society's total utility is maximized. Vilfredo Pareto used an Edgeworth box contact line to illustrate a similar social optimality. Ludwig von Mises, in Human Action uses the expression "the invisible hand of Providence", referring to Marx's period, to mean evolutionary meliorism.[28] He did not mean this as a criticism, since he held that secular reasoning leads to similar conclusions. Milton Friedman, a Nobel Memorial Prize winner in economics, called Smith's Invisible Hand "the possibility of cooperation without coercion."[29] Kaushik Basu has called the First Welfare Theorem the Invisible Hand Theorem.[30]

Some economists question the integrity of how the term "invisible hand" is currently used. Gavin Kennedy, Professor Emeritus at Heriot-Watt University in Edinburgh, Scotland, argues that its current use in modern economic thinking as a symbol of free market capitalism is not reconcilable with the rather modest and indeterminate manner in which it was employed by Smith.[31] In response to Kennedy, Daniel Klein argues that reconciliation is legitimate. Moreover, even if Smith did not intend the term "invisible hand" to be used in the current manner, its serviceability as such should not be rendered ineffective.[32] In conclusion of their exchange, Kennedy insists that Smith's intentions are of utmost importance to the current debate, which is one of Smith's association with the term "invisible hand". If the term is to be used as a symbol of liberty and economic coordination as it has been in the modern era, Kennedy argues that it should exist as a construct completely separate from Adam Smith since there is little evidence that Smith imputed any significance onto the term, much less the meanings given it at present.[33]

The former Drummond Professor of Political Economy at Oxford, D. H. MacGregor, argued that:

The one case in which he referred to the 'invisible hand' was that in which private persons preferred the home trade to the foreign trade, and he held that such preference was in the national interest, since it replaced two domestic capitals while the foreign trade replaced only one. The argument of the two capitals was a bad one, since it is the amount of capital that matters, not its subdivision; but the invisible sanction was given to a Protectionist idea, not for defence but for employment. It is not surprising that Smith was often quoted in Parliament in support of Protection. His background, like ours today, was private enterprise; but any dogma of non-intervention by government has to make heavy weather in The Wealth of Nations.[34]

Harvard economist Stephen Marglin argues that while the "invisible hand" is the "most enduring phrase in Smith's entire work", it is "also the most misunderstood."

Economists have taken this passage to be the first step in the cumulative effort of mainstream economics to prove that a competitive economy provides the largest possible economic pie (the so-called first welfare theorem, which demonstrates the Pareto optimality of a competitive regime). But Smith, it is evident from the context, was making a much narrower argument, namely, that the interests of businessmen in the security of their capital would lead them to invest in the domestic economy even at the sacrifice of somewhat higher returns that might be obtainable from foreign investment. . . .

David Ricardo . . . echoed Smith . . . [but] Smith's argument is at best incomplete, for it leaves out the role of foreigners' investment in the domestic economy. It would have to be shown that the gain to the British capital stock from the preference of British investors for Britain is greater than the loss to Britain from the preference of Dutch investors for the Netherlands and French investors for France."[35]

According to Emma Rothschild, Smith was actually being ironic in his use of the term.[36] Warren Samuels described it as "a means of relating modern high theory to Adam Smith and, as such, an interesting example in the development of language."[37]

Proponents of liberal economics, for example Deepak Lal, regularly claim that the invisible hand allows for market efficiency through its mechanism of acting as an indicator of what the market considers important, or valuable.[38]

Understood as a metaphor

Smith uses the metaphor in the context of an argument against protectionism and government regulation of markets, but it is based on very broad principles developed by Bernard Mandeville, Bishop Butler, Lord Shaftesbury, and Francis Hutcheson. In general, the term "invisible hand" can apply to any individual action that has unplanned, unintended consequences, particularly those that arise from actions not orchestrated by a central command, and that have an observable, patterned effect on the community.

Bernard Mandeville argued that private vices are actually public benefits. In The Fable of the Bees (1714), he laments that the "bees of social virtue are buzzing in Man's bonnet": that civilized man has stigmatized his private appetites and the result is the retardation of the common good.

Bishop Butler argued that pursuing the public good was the best way of advancing one's own good since the two were necessarily identical.

Lord Shaftesbury turned the convergence of public and private good around, claiming that acting in accordance with one's self-interest produces socially beneficial results. An underlying unifying force that Shaftesbury called the "Will of Nature" maintains equilibrium, congruency, and harmony. This force, to operate freely, requires the individual pursuit of rational self-interest, and the preservation and advancement of the self.

Francis Hutcheson also accepted this convergence between public and private interest, but he attributed the mechanism, not to rational self-interest, but to personal intuition, which he called a "moral sense". Smith developed his own version of this general principle in which six psychological motives combine in each individual to produce the common good. In The Theory of Moral Sentiments, vol. II, page 316, he says, "By acting according to the dictates of our moral faculties, we necessarily pursue the most effective means for promoting the happiness of mankind."

Contrary to common misconceptions, Smith did not assert that all self-interested labour necessarily benefits society, or that all public goods are produced through self-interested labour. His proposal is merely that in a free market, people usually tend to produce goods desired by their neighbours. The tragedy of the commons is an example where self-interest tends to bring an unwanted result.

The invisible hand is traditionally understood as a concept in economics, but Robert Nozick argues in Anarchy, State and Utopia that substantively the same concept exists in a number of other areas of academic discourse under different names, notably Darwinian natural selection. In turn, Daniel Dennett argues in Darwin's Dangerous Idea that this represents a "universal acid" that may be applied to a number of seemingly disparate areas of philosophical inquiry (consciousness and free will in particular), a hypothesis known as Universal Darwinism. Positing an economy guided by this principle as ideal may amount to Social Darwinism, which is also associated with champions of laissez-faire capitalism.

Tawney's interpretation

Christian socialist R. H. Tawney saw Smith as putting a name on an older idea:

If preachers have not yet overtly identified themselves with the view of the natural man, expressed by an eighteenth-century writer in the words, trade is one thing and religion is another, they imply a not very different conclusion by their silence as to the possibility of collisions between them. The characteristic doctrine was one, in fact, which left little room for religious teaching as to economic morality, because it anticipated the theory, later epitomized by Adam Smith in his famous reference to the invisible hand, which saw in economic self-interest the operation of a providential plan... The existing order, except insofar as the short-sighted enactments of Governments interfered with it, was the natural order, and the order established by nature was the order established by God. Most educated men, in the middle of the [eighteenth] century, would have found their philosophy expressed in the lines of Pope:

Thus God and Nature formed the general frame,
And bade self-love and social be the same.

Naturally, again, such an attitude precluded a critical examination of institutions, and left as the sphere of Christian charity only those parts of life that could be reserved for philanthropy, precisely because they fell outside that larger area of normal human relations, in which the promptings of self-interest provided an all-sufficient motive and rule of conduct. (Religion and the Rise of Capitalism, pp. 191–192.)

Criticisms

Joseph E. Stiglitz

The Nobel Prize-winning economist Joseph E. Stiglitz, says: "the reason that the invisible hand often seems invisible is that it is often not there."[39][40] Stiglitz explains his position:

Adam Smith, the father of modern economics, is often cited as arguing for the "invisible hand" and free markets: firms, in the pursuit of profits, are led, as if by an invisible hand, to do what is best for the world. But unlike his followers, Adam Smith was aware of some of the limitations of free markets, and research since then has further clarified why free markets, by themselves, often do not lead to what is best. As I put it in my new book, Making Globalization Work, the reason that the invisible hand often seems invisible is that it is often not there. Whenever there are "externalities"—where the actions of an individual have impacts on others for which they do not pay, or for which they are not compensated—markets will not work well. Some of the important instances have long understood environmental externalities. Markets, by themselves, produce too much pollution. Markets, by themselves, also produce too little basic research. (The government was responsible for financing most of the important scientific breakthroughs, including the internet and the first telegraph line, and many bio-tech advances.) But recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets—that is always. Government plays an important role in banking and securities regulation, and a host of other areas: some regulation is required to make markets work. Government is needed, almost all would agree, at a minimum to enforce contracts and property rights. The real debate today is about finding the right balance between the market and government (and the third "sector" – governmental non-profit organizations). Both are needed. They can each complement each other. This balance differs from time to time and place to place.[40]

The preceding claim is based on Stiglitz's 1986 paper, "Externalities in Economies with Imperfect Information and Incomplete Markets",[41] which describes a general methodology to deal with externalities and for calculating optimal corrective taxes in a general equilibrium context. In it he considers a model with households, firms and a government.

Households maximize a utility function , where is the consumption vector and are other variables affecting the utility of the household (e.g. pollution). The budget constraint is given by , where q is a vector of prices, ahf the fractional holding of household h in firm f, πf the profit of firm f, Ih a lump sum government transfer to the household. The consumption vector can be split as .

Firms maximize a profit , where yf is a production vector and p is vector of producer prices, subject to , Gf a production function and zf are other variables affecting the firm. The production vector can be split as .

The government receives a net income , where is a tax on the goods sold to households.

It can be shown that in general the resulting equilibrium is not efficient.

Noam Chomsky

Noam Chomsky suggests that Smith (and more specifically David Ricardo) sometimes used the phrase to refer to a "home bias" for investing domestically in opposition to offshore outsourcing production and neoliberalism.[42]

Rather interestingly, these issues were foreseen by the great founders of modern economics, Adam Smith for example. He recognized and discussed what would happen to Britain if the masters adhered to the rules of sound economics – what's now called neoliberalism. He warned that if British manufacturers, merchants, and investors turned abroad, they might profit but England would suffer. However, he felt that this wouldn't happen because the masters would be guided by a home bias. So as if by an invisible hand England would be spared the ravages of economic rationality. That passage is pretty hard to miss. It's the only occurrence of the famous phrase "invisible hand" in Wealth of Nations, namely in a critique of what we call neoliberalism.[43]

Stephen LeRoy

Stephen LeRoy, professor emeritus at the University of California, Santa Barbara, and a visiting scholar at the Federal Reserve Bank of San Francisco, offered a critique of the Invisible Hand, writing that "The single most important proposition in economic theory, first stated by Adam Smith, is that competitive markets do a good job allocating resources. (...) The financial crisis has spurred a debate about the proper balance between markets and government and prompted some scholars to question whether the conditions assumed by Smith...are accurate for modern economies.[44]

John D. Bishop

John D. Bishop, a professor who worked at Trent University, Peterborough, indicates that the invisible hand might be applied differently to merchants and manufacturers from how it is applied with society. He wrote an article in 1995 titled "Adam Smith's Invisible Hand Argument", in which he suggests that Smith might be contradicting himself with the "Invisible Hand". He offers various critiques of the "Invisible Hand", and he writes that "the interest of business people are in fundamental conflict with the interest of society as a whole, and that business people pursue their personal goal at the expense of the public good". Thus, Bishop indicates that the "business people" are in conflict with society over the same interests and that Adam Smith might be contradicting himself. According to Bishop, he also gives the impression that in Smith's book 'The Wealth of Nations,' there's a close saying that "the interest of merchants and manufacturers were fundamentally opposed of society in general, and they had an inherent tendency to deceive and oppress society while pursuing their own interests." Bishop also states that the "invisible hand argument applies only to investing capital in one's own country for a maximum profit." In other words, he suggests that the invisible hand applies to only the merchants and manufacturers and that they're not the invisible force that moves the economy. He contends the argument "does not apply to the pursuit of self-interest (...) in any area outside of economic activities".[45]

Thomas Piketty

French economist Thomas Piketty notes that although the Invisible Hand does exist and thus that economic imbalances correct themselves over time, those economic imbalances may lead to an extended unoptimal utility, which could be solved thanks to non-commercial processes. He takes for instance the cases of real estate of which imbalances may last decades,[46] and of the Great Famine of Ireland, which could have been avoided by shipments of food from Great Britain to areas in crisis without waiting for new bread producers to come.[47]

See also

Books
Articles

References

  1. ^ Grampp, William D. (June 2000). "What Did Smith Mean by the Invisible Hand?". Journal of Political Economy. University of Chicago Press. 108 (3): 441–465. doi:10.1086/262125. S2CID 154797179.
  2. ^ Rothschild, Emma (1994). "Adam Smith and the Invisible Hand". The American Economic Review. 84 (2): 319–322. JSTOR 2117851.
  3. ^ Sen, Amartya. Introduction. The Theory of Moral Sentiments. By Adam Smith. 6th ed. 1790. New York: Penguin, 2009. vii–xxix.
  4. ^ Slater, D. & Tonkiss, F. (2001). Market Society: Markets and Modern Social Theory. Cambridge: Polity Press, pp. 54–5
  5. ^ Kennedy, Gavin (2010). "Paul Samuelson and the Invention of the Modern Economics of the Invisible Hand". History of Economic Ideas. Accademia Editoriale. 18 (3): 105–119. JSTOR 23724554. Modern attributions to Adam Smith's use of the Invisible-Hand metaphor are at variance with Smith's teachings on the use and role of metaphors, and, therefore, they misread his contributions in moral philosophy and his political economy.
  6. ^ Class, Master (November 8, 2020). "What Is the Invisible Hand in Economics?". www.masterclass.com. MasterClass. Retrieved February 17, 2021. Eighteenth-century economist Adam Smith developed the concept of the Invisible Hand, which became one of the cornerstone concepts of a free market economic system.
  7. ^ a b Handbook of the history of economic thought : insights on the founders of modern economics. Jürgen G. Backhaus. New York, NY: Springer. 2012. p. 171. ISBN 978-1-4419-8336-7. OCLC 761868679.{{cite book}}: CS1 maint: others (link)
  8. ^ a b Grampp, William D. (2000). "What Did Smith Mean by the Invisible Hand?". Journal of Political Economy. 108 (3): 441–465. doi:10.1086/262125. ISSN 0022-3808. S2CID 154797179.
  9. ^ Thornton, Mark. "Cantillon and the Invisible Hand". Quarterly Journal of Austrian Economics, Vol. 12, No. 2 (2009) pp. 27–46.
  10. ^ Olsen, James Stewart. Encyclopedia of the Industrial Revolution. Greenwood Publishing Group, 2002. pp. 153–154
  11. ^ "Sunan Abi Dawud 3450 – Wages (Kitab Al-Ijarah) – كتاب الإجارة – Sunnah.com – Sayings and Teachings of Prophet Muhammad (صلى الله عليه و سلم)". sunnah.com. Retrieved April 27, 2021.
  12. ^ "Sunan Abi Dawud 3451 – Wages (Kitab Al-Ijarah) – كتاب الإجارة – Sunnah.com – Sayings and Teachings of Prophet Muhammad (صلى الله عليه و سلم)". sunnah.com. Retrieved April 27, 2021.
  13. ^ Khan, Muhammad (December 15, 2016). "Building Islamic Economics from Theological Roots". Rochester, NY. doi:10.2139/ssrn.2886156. S2CID 157517900. SSRN 2886156. {{cite journal}}: Cite journal requires |journal= (help)
  14. ^ Smith, A., 1980, The Glasgow edition of the Works and Correspondence of Adam Smith, 7 vol., Oxford University Press, vol. III, p. 49
  15. ^ Smith, A., 1976, The Theory of Moral Sentiments, vol. 1, p. 184 in: The Glasgow Edition of the Works and Correspondence of Adam Smith, 7 vol., Oxford University Press
  16. ^ Smith, Adam (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. Vol. II (1st ed.). London: W. Strahan & T. Cadell. p. 32.
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  46. ^ English., Summary of (work): Piketty, Thomas, 1971- Capital au XXIe siècle. (June 6, 2016). Summary of Capital in the twenty-first century by Thomas Piketty. Instaread Summaries. ISBN 978-1-68378-328-2. OCLC 959281047.{{cite book}}: CS1 maint: multiple names: authors list (link) CS1 maint: numeric names: authors list (link)
  47. ^ Piketty, Thomas (August 14, 2023). Capital and Ideology. Harvard University Press. p. 293. ISBN 978-0-674-24507-5. OCLC 1266228694. On se refusa de planifier [le] transfert immédiat [de nourriture] vers les zones de détresse, en partie au motif qu'il fallait laisser l'augmentation des prix jouer son rôle de signal et inciter ainsi les détenteurs de réserves de grains à répondre à cette demande par le biais des forces de marché. [They refused to send shipments of food to areas in crisis, partly for letting price increase work as a signal and incentivize bread holders to respond to this demand through market forces.]

Bibliography

Further reading

External links

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