Peter Radford — What Would Smith Say?

The invisible hand was just not that important to Smith. He didn’t mean to launch economics into a century or more of quixotic and ever more bizarre search for something that he meant as a passing reference to the superficial order he saw around him.

Smith spent no more time on the invisible hand metaphor than he did on other phrases that are much more concrete. How about this one:

“Regulation is in support of the workman, it is always just and equitable.”

Where in the corpus of mainstream economics is this phrase worked up into a fully fledged and extended effort in the manner that the throwaway reference to the invisible hand is?

Well we don’t need to explain much further: economics was and is an extension of politics. It is politics waged by other means. It doesn’t exist as a coherent entity, it exists as variations to be deployed preferentially to support some other argument. And that other argument is usually political.

Economics is a form of apologetics and polemics based on the political theory of classical liberalism holding that economic liberalism is equivalent to political liberalism, so that the market state is the ideal social and political arrangement.

Since government intrudes on the market state through policy, government should be limited to providing security and maintaining public order. It is assumed that truly democratic decision-making takes place in markets. Markets are the real elections in which participants rationally maximize utility based on revealed preferences.

This is quite obviously philosophy rather than science, and when the assumptions are taken dogmatically, it passes into theology.

The Radford Free Press
What Would Smith Say?
Peter Radford