Theory of Moral Sentiments,

1
Theory of Moral Sentiments,

• Adam Smith uses the invisible hand to explain the
  distribution of wealth (1759, p. 350)
• The rich ... consume little more than the poor,
  and in spite of their natural selfishness ...
  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 ... advance the interest of the
  society, and afford means to the multiplication
  of the species.

2
Views on Smiths invisible Hand

• 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 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.

3
Noam Chomsky

• Noam Chomsky, while acknowledging the
  intelligence of Smith's thesis, criticizes how
  the term of the "invisible hand" has been used.
  He also explains
• Throughout history, Adam Smith observed, we find
  the workings of "the vile maxim of the masters of
  mankind" "All for ourselves, and nothing for
  other People." He had few illusions about the
  consequences. The invisible hand, he wrote,
  destroys the possibility of a decent human
  existence "unless government takes pains to
  prevent" this outcome, as must be assured in
  "every improved and civilized society." It
  destroys community, the environment, and human
  values generallyand even the masters themselves,
  which is why the business classes have regularly
  called for state intervention to protect them
  from market forces.

4
E. K. Hunt

• The political economist E. K. Hunt criticized
  markets and the externalities emerging from
  market exchanges as being a route for
  self-advancement at the expense of social good.
  Hunt helped contribute to the literature on
  heterodox economics, helping to coin the term
  "invisible foot" in contrast to a presumably
  beneficent "invisible hand"

5

• If we assume the maximizing economic man of
  bourgeois economics, and if we assume the
  government establishes property rights and
  markets for these rights whenever an external
  diseconomy is discovered the preferred
  "solution" of the conservative and increasingly
  dominant trend within the field of public
  finance, then each man will soon discover that
  through contrivance he can impose external
  diseconomies on other men, knowing that the
  bargaining within the new market that will be
  established will surely make him better off.

6

• The more significant the social cost imposed upon
  his neighbor, the greater will be his reward in
  the bargaining process. It follows from the
  orthodox assumption of maximizing man that each
  man will create a maximum of social costs which
  he can impose on others. D'Arge labeled this
  process as "the invisible foot" of the laissez
  faire ... market place. The "invisible foot"
  ensures us that in a free-market ... economy each
  person pursuing only his own good will
  automatically, and most efficiently, do his part
  in maximizing the general public misery. "