Sam: If you’ll re-read what I wrote you’ll see that the tone of my last wasn’t at all “gotcha.” In fact I said you’d honorably passed the test of judging “Marx” by your own lights; and I also said that I knew you could do the same thing to me. So let’s not get carried away, please.
"I suspect that Mandelstam was waiting for me to pop off a knee-jerk “That’s a ridiculous paragraph” comment, that he could then turn on me and go, “Ah ha!”
I am shocked! After all these months and you still don’t know that I’m a woman! :mad:
Seriously, Sam, I never use a term like “honorable” unless I mean it. Please believe me when I say that I was very pleased that everyone comported himself so well during my experiment.
Here we have Olentzero taking Adam Smith’s part (!), Sua showing no sign of soreness whatsoever :), while you basically contrasted a famous excerpt from Smith to one that is hardly known at all. As I said, an honorable response to a set-up that only a serious Smith scholar would have noticed.
"I’m more interested in sharing ideas and trying to learn and teach than I am in trying to spring traps on my opponents. "
As am I, Sam, and I apologize for the trap; I can understand why you see it that way. All I can say, though, is that if I were you I’d be pleased with myself. I hope we can shake on this one as I had not intention to goad you, or to glory in a cheap shot, whatever your response might have been.
“I’m fully aware that many people think the ‘invisible hand’ is a mystical appeal, but it’s not the case. We’re not talking about God here, we’re talking about the fact that the market is a regulatory body that compels people to act in certain ways if they wish to get ahead.”
Well, now we’re onto debate. The truth is that you may not be talking about God, but Smith was (see below).
“But if we are acting in the marketplace, the only way I can get your car is to give you what you want in exchange. I was guided ‘as if by an invisible hand’ to give you something that you want, in order to further my own interests. That’s a very simplistic example, but that’s what the invisible hand means.”
To you, no doubt. People have forgotten that Smith was a moralist; they’ve forgotten that he was the author of the The Theory of Moral Sentiments (in which it is is posited that people are endowed with innate morality), and, most important, they’ve forgotten huge chunks of The Wealth of Nations, including the passage I cited above.
Here are some other interesting Smith quotations, that fly in the face of his supposed laissez-fairism:
From the Theory of Moral Sentiments, here’s the basic context for the “invisible hand”:
“By acting according to the dictates of our moral faculties, we necessarily pursue the most effectual means of promoting the happiness of mankind, and may therefore be said in some sense to co-operate with the Deity and to advance, as far as in our power, the Plan of Providence.” (emphasis Smith’s).
From Wealth of Nations:"…[Moral defects] deserve the most serious attention of government, in the same manner as it would deserve its most serious attention to prevent a leprosy or any other loathsome and offensive disease, though neither mortal nor dangerous, from spreading itself among them, though perhaps no other public good might result from such attention besides the prevention of so great a public evil."
This is from his little-known Lectures on Jurisprudence (for Smith was a professor of moral philosophy):
“Laws and government may be considered…in every case as a combination of the rich to oppress the poor, and preserve to themselves the inequality of the goods which would otherwise be soon destroyed by the attacks of the poor… The government and laws hinder the poor from ever acquiring the wealth by the violence which they would otherwise exert on the rich; they tell them they must either continue poor or acquire wealth in the same manner as they [the rich] have done.”
(BTW: Smith isn’t taking a proto-Marxist position here though. He’s basically setting up his anti-mercantilism.)
Here again, from Wealth of Nations, from the famous section on the Divison of Labor:
“In some cases the state of the society necessarily places the greater part of individuals in such situations as naturally form in them, without any attention of government, almost all the abilities and virtues which that state requires, or perhaps can admit of. In other cases the state of the society does not place the part of individuals in such situations, and some attention of government is necessary in order to prevent the almost entire corruption and degeneracy of the great body of the people.”
He basically argues that industrial labor is an instance of the latter case, necessitating government intervention to make certain that laborers were not entirely demoralized and dehumanized by their repetitive work.
Here is an excerpt from that argument:
“The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life. Of the great and extensive interests of his country he is altogether incapable of judging, and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war. The uniformity of his stationary life naturally corrupts the courage of his mind, and makes him regard with abhorrence the irregular, uncertain, and adventurous life of a soldier. It corrupts even the activity of his body, and renders him incapable of exerting his strength with vigour and perseverance in any other employment than that to which he has been bred. His dexterity at his own particular trade seems, in this manner, to be acquired at the expense of his intellectual, social, and martial virtues. But in every improved and civilised society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it.” (emphasis mine).
Now back to Sam: “There are lots of anguished moments as we [Sam’s company] try and figure out how to afford to do some of these things, how we can stretch resources, how much money we’ll have to spend to implement them, etc. This is money that the company would rather not spend - we’d rather make stuff with less investment at high margins and make out like bandits. But we can’t, because the market FORCES us to do this in order to compete. So for the company to get ahead, we have to listen to what the market DICTATES to us. This is the invisible hand in action.”
This is certainly market forces in action. And you can choose to call market forces an invisible hand if you like. But the same market forces that compel your company to to stretch resources effectively have forced (or, if you prefer, tempted) many another company to cut back on crucial research and development, training or safety; to pollute the environment if no laws were in place to penalize pollution; to move offshore in order to avoid safe and humane labor standards, etc.
It is a poor and mistaken reading of Smith that equates any market effect with “the invisible hand” when, by that term, Smith was discussing innate “moral faculties” and the will of God. Sorry Sam, but if you insist on invoking Smith, it just might be time for you to put down Hayek and pick up Smith’s extraordinarily complex works.
