Introduction: The Principles That Lead and Direct Philosophical Inquiries

In his History of Astronomy (Smith 1980), Adam Smith argues that our imagination is disturbed by sentiments of wonder, surprise, and admiration, owing, respectively, to new phenomena, the unexpected, and the great or beautiful. Such disturbances induce philosophical (read: scientific) inquiry into “the invisible chains which bind together all these disjointed objects” to

Such inquiries are undertaken “to sooth the imagination, and to render the theatre of nature a more coherent, and therefore a more magnificent spectacle, than otherwise it would have appeared to be” (idem: II.12; 46).

The function of inquiry is to allay the tumult of the imagination, to soothe the imagination. Thus, in his History of the Ancient Physics, the second of Smith’s three essays on the principles that lead and direct philosophical inquiries, the motivation is again “[t]o introduce order and coherence into the mind’s conception …” (Smith 1980: 107).

1

Both the genesis and nature of these essays require explanation. I started working on the invisible-hand project in 1983. My initial examinations of material nourished my interest as an intellectual historian. As the examined materials continued to grow, so too did the facets, related topics, implications, and overall breadth of the topic and the magnitude of the relevant materials. Captivated, I gradually started to understand how human beings could become so enamored with invisibility in general and the invisible hand in particular, such that the invisible hand began to have a linguistic, ontological, and epistemological significance. Reference to the invisible hand is ubiquitous. The growth of the Internet, coupled with people’s desire to have written materials they consider important made available to others (often in translation), has vastly increased the volume and ease of acquisition of relevant materials. The volume of relevant source material reasonably pertinent to a project such as the present one is daunting. This is especially true of a topic that has ramifications with so much else that goes on in society. Only a small percentage of such materials can be used in reaching understanding and conclusions, even if the researcher is avid. And the researcher has to be careful in amassing and interpreting information, for well-known reasons.

The physical problem of producing a detailed study under the conditions I allowed myself to develop cannot be overstated. It is not a project for a young person who, on the one hand, must publish, and on the other, lacks the time in which the range, complexity, and interconnections of ideas can be nurtured. It is a project for a team, not one person, however able and motivated. The enormity of the materials on which the account will ultimately be based is mind-boggling. I have the equivalent of at least forty file drawers (that is, ten four-drawer filing cabinets) of published and unpublished materials, to which must be added several sizeable boxes of note slips and one-quarter or more of a library running to at least twelve thousand books and journals.

Introduction

The meaningfulness of the concept of the invisible hand depends on the status of the invisible hand as knowledge. Essay 6 examined the linguistic status of the concept. This essay is concerned with the concept’s ontological and epistemological status. Considerably more attention has been given in the literature to linguistic issues than to ontological and epistemological issues. The results of this discussion were essentially negative. The ontological and epistemological issues, rarely directly discussed in the literature, are actually fairly straightforward. Once again, however, the results of the discussion are negative.

Ontology and the Status of the Invisible Hand

Metaphysics has to do with absolutes and ultimates. One branch of metaphysics, cosmology, deals with the origin and structure of the world, or universe, broadly defined. Closely related is ontology, which has to do with the ultimate nature of being, existence (both per se and nature), and/or reality, including first principles. Theology is the study of the nature of God and the relations of God to the universe and to humankind, as well as the study of religious doctrine. Ethics is the study of standards of conduct and of moral judgment, and comprises the domain of normative propositions (dealing with goodness, propriety, and ought). Epistemology is the theory of knowledge, which some scholars place within metaphysics. Cosmology, ontology, epistemology, theology, and ethics have in common the subject matter of existence whose ultimate content, nature, or first principles generally cannot be directly dealt with and/or experienced, and whose study is substantially conjectural. Accordingly, propositions that arguably form the content of these fields are matters of assertion. They provide no basis for study that permits either conclusive confirmation or disconfirmation of their existence or characteristics, nor do they have conclusive metaprinciples enabling comparisons and/or choice of competing principles.

Introduction

It should be clear from Essay 1 that with the obvious exception of Smith’s noneconomic example, the invisible hand of Jupiter, Adam Smith does not indicate what he believes to be the “economic” invisible hand of the Theory of Moral Sentiments and the Wealth of Nations. It is notable, however, that in both economic uses he chose to say, in the first, that the rich “are led by an invisible hand,” and in the second, that the individual intending “only his own gain … is in this, as in many other cases, led by an invisible hand” (Smith 1976a: IV.i.10, 184; Smith 1976b: IV.ii.9.456). In a note at this point in the earlier work, the editors, Raphael and Macfie, note that “In both places Smith says that the end unintentionally promoted is the interest of society, but there is a difference: the TMS passage refers to the distribution of means to happiness, the WN passage to maximization” (Smith 1976a: IV.i.10.184n7).

Smith wrote “led” and not “as if led.” He also wrote “an invisible hand” in both places. He may or may not have had one invisible hand in mind. I have shown that in his explanation of the etiology of the division of labor, Smith uses several causal factors (Samuels 2004: chapter 1). He may have been sloppy or forgetful but each tends to be presented in a manner that accords with the immediate argument of his essay on The History of Astronomy, that when a person is unable to establish the true explanation of something, then he or she is willing to accept whatever belief will “soothe the imagination,” or set minds at rest. It is this linguistic strategy that Smith’s writings emphasize by illustration.

Introduction

This essay concentrates on the theory of economic policy, especially the economic role of government, to be found in Adam Smith’s works, both his own publications and the notes taken down by students from his lectures on law and government. Considered first is the leading interpretation or ostensible application of his purported ideas that, in my view, is nothing less than the economic ideology or economic belief system of western civilization. It is sometimes called laissez-faire or noninterventionism, notably the ideology largely embraced by the discipline of economics and, within it, especially the Chicago School, notably Milton Friedman, and the companion ideas of Friedrich Hayek.

Laissez-faire

Laissez-faire is generally used in three contexts: minimization of legal change; a particular vision of an economy; and legal change to bring about that particular vision. Discussion here focuses on the first.

The Interpretation of Adam Smith

Adam Smith and David Hume, as well as Thomas Hobbes and John Locke, are the premier philosophers of modern western civilization. Such stature is Smith’s in part because he comprehended and analyzed the deepest levels of the newly developing industrial market economy. I propose to interpret Smith’s model of the market economy in terms of his total system of thought and analysis. This system, with all its oppositions and tensions, comprises Smith’s solution to the problem of order, or of the organization and control of the economic system. Expressed somewhat differently, I shall inquire into the significance for economic policy and policy making of the central arguments presented in the Wealth of Nations, The Theory of Moral Sentiments, History of Astronomy, and the two sets of student notes from Smith’s lectures on law and government. Smith speaks to the ages, or at least he is still being heard in our age. What does he have to say on the most fundamental level? What is really going on in our economic system, according to Adam Smith?

I first must acknowledge certain considerations involved in the retrospective interpretation of the history of thought in general and of specific classic literature in particular. These considerations necessarily limit my analysis and argument.