There most certainly is NOT!! It baffles me time and time again how many plain lies and misconceptions are deeply ingrained in our collective subconsciousness. Let's go look together for this mystical, magical, equilibrium-creating hand...
Adam Smith. source: Foundation for Economic Education
If I want to know what this "invisible hand" is, I look for it on Google and type "what is the invisible hand" into the search-bar. After the obligatory Wikipedia and Investopedia results, the first relevant hit on number 3 is an article by The Economic Times, and it's just what I'm looking for. Let's see what it says:
Definition: The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand.
Well, that's a good start: it is exactly what everybody tells me when talking about the markets failing. They blame it on too much government intervention; if they just "let the market do it's work" and "don't hinder free trade with taxation or trade regulations", everybody will get what's truly theirs. Just let demand and supply do their work, and the equilibrium would kick in as if by magic...
This is so sad in my mind: how could anyone believe this? This market we're talking about is based on ownership and that in itself ends the "free" portion of this market. There has never been and there will never be a free market, or a free (anarchist) society, as regulations begin with ownership! Ownership itself is a legal construct, for Peet's sake... The only anarchist society that's possible in theory is communism, a classless, stateless and moneyless society, a society without private property and without a government. Unless you count barbarism as a viable mode of living together...
But that's not even the point here. The article continues:
Description: The phrase invisible hand was introduced by Adam Smith in his book 'The Wealth of Nations'. He assumed that an economy can work well in a free market scenario where everyone will work for his/her own interest.
He explained that an economy will comparatively work and function well if the government will leave people alone to buy and sell freely among themselves.
Does this sound familiar? I thought so. But why do so many believe it? Why do so many believe that in a system that's based on the increasing of private ownership through competing with only one's own interests in mind, there will somehow be any type of balance? I can only see that the most callous greedy egotistical bastards will be most successful in this system. You know, the ones that lack empathy, the ones that are ruling the world today; it can only end in the plutocracy we have today. This is why you should laugh in the faces of those who claim that crony-capitalism is a product of too much government interference. No, it's simply the incorporation of government in capitalists' everlasting quest for more profits.
This should be obvious, because all great empires in the past died on the same note, and they all professed their own version of capitalism; a system in which the means of production are in the private hands of a few, with the rest working for their benefit, regardless if you want to call it feudalism, slavery or capitalism. You all know the saying "history is written by the victors", right? And you all understand this to be factual, right..? Right? Okay, well then this must also be true for that one, everlasting war, the war between the classes. Not only the history about the clashes between peoples and nations (which also really are just clashes between the uppermost class of one nation trying to get something from the uppermost class of another nation), but all of our histories have been written by those victors.
I said it before, and I'll repeat it here: no conspiracy theories are needed to explain the deplorable state of justice and humanity in the world today; it's all that's allowed by the ruling plutocracy. Forget the Illuminati and the infamous family names that are tied to them: they may be true, they may not be true, but they're ultimately unnecessary and detract from the simple causes, open for anyone to see, in the capitalist economy.
The Essential Adam Smith: The Invisible Hand
Back to the matter at hand, even if it is invisible... This article from "The Economic Times" is a prime example of general believe, of today's market-dogma. But it is a lie. Smith did not introduce The Invisible Hand in "The Wealth of Nations", the free-market bible from 1776. He first mentioned the phrase in a much earlier book, "The Theory of Moral Sentiments" (1759), in which he most certainly did not describe it as some unseen force that guides markets.
The book starts with this:
How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it. Of this kind is pity or compassion, the emotion we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrows of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous or the humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.
Today it is understood that this book provides "the ethical, philosophical, psychological, and methodological underpinnings to Smith's later works, including The Wealth of Nations". To be clear: Smith believed that every man has empathy and acts upon that. That's all this is saying, and it is the basis for what he had to say about the invisible hand later in this book and later books:
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 conveniency, though the sole end which they propose from the labours 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.
source: Wikipedia
Now, just to make sure you know where the father of modern economics really came from, an excerpt from The Adam Smith Institute:
The Theory Of Moral Sentiments was a real scientific breakthrough. It shows that our moral ideas and actions are a product of our very nature as social creatures. It argues that this social psychology is a better guide to moral action than is reason. It identifies the basic rules of prudence and justice that are needed for society to survive, and explains the additional, beneficent, actions that enable it to flourish.
Self-interest and sympathy. As individuals, we have a natural tendency to look after ourselves. That is merely prudence. And yet as social creatures, explains Smith, we are also endowed with a natural sympathy – today we would say empathy – towards others. When we see others distressed or happy, we feel for them – albeit less strongly. Likewise, others seek our empathy and feel for us. When their feelings are particularly strong, empathy prompts them to restrain their emotions so as to bring them into line with our, less intense reactions. Gradually, as we grow from childhood to adulthood, we each learn what is and is not acceptable to other people. Morality stems from our social nature.
See, what's happened there? This Invisible Hand, he attributed in part to the behavior of the owners of the means of production; they would be guided by this hand, not the markets. And the guidance he's talking about is in part an appeal to their moral values, not just the intricate system of market-forces. Elsewhere in The Theory of Moral Sentiments, Smith has described the desire of men to be respected by the members of the community in which they live, and the desire of men to feel that they are honorable beings. Well... Did this appeal come into realization? Are the philanthropists of our world not also the robber barons who cause the need for philanthropy in the first place? You know the answer to this question; profits have multiplied, production has skyrocketed, but real wages have been stagnant since the 1970s. The modern robber barons extracted from Smith's works only his emphasis on the individual, they extrapolated from that an unhealthy focus on self-interest thereby transforming it into pure self-centeredness and selfishness. Which is probably why The Invisible Hand is now attributed only to the system itself, instead of the wealthy actors in the system, spawning a culture that celebrates greed and adores the greedy.
Also, realize that Smith was very well aware of all the other dangers that came with the fundamentals of his vision for the modernizing economy, like "the division of labor"; he warned us that large parts of society would get dumb down by this and that this in turn would damage the workings of any democracy. It's funny: Smith and Marx agreed on so many things, but the Plutocrats manage to make us believe only in their disagreements and, like in any war-propaganda, inflated both sides. Divide and Rule still works...
"Karl Marx and Adam Smith – each in his own time – both considered that it is the workers not the bosses/capitalists who produce value."
source: LINKS
For those who still need more proof that laissez-faire capitalism simply doesn't work, that there is no Invisible Hand, here's a 2012 Harvard Business Review article titled "There Is No Invisible Hand":
One of the best-kept secrets in economics is that there is no case for the invisible hand. After more than a century trying to prove the opposite, economic theorists investigating the matter finally concluded in the 1970s that there is no reason to believe markets are led, as if by an invisible hand, to an optimal equilibrium — or any equilibrium at all. But the message never got through to their supposedly practical colleagues who so eagerly push advice about almost anything. Most never even heard what the theorists said, or else resolutely ignored it. [...] Adam Smith suggested the invisible hand in an otherwise obscure passage in his Inquiry Into the Nature and Causes of the Wealth of Nations in 1776. He mentioned it only once in the book, while he repeatedly noted situations where “natural liberty” does not work. Let banks charge much more than 5% interest, and they will lend to “prodigals and projectors,” precipitating bubbles and crashes. Let “people of the same trade” meet, and their conversation turns to “some contrivance to raise prices.” Let market competition continue to drive the division of labor, and it produces workers as “stupid and ignorant as it is possible for a human creature to become.”
As today's general understanding of The Invisible Hand is based on an untruthful interpretation of Adam Smith's writing, so is the notion that "greed is good" based on a complete misinterpretation of Darwin's "survival of the fittest"... But this rant, and it is a rant, as I'm getting sick and tired of people praising the system that's keeping them down, has gone on long enough. If you made it this far though, I'm grateful, as always, for your attention and continued support.
Even Adam Smith Didn’t Trust the Invisible Hand, with Thomas Piketty
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