David Sloan Wilson — How to Construct a New Invisible Hand: A Conversation with Peter Barnes

In a previous essay, I announced a new concept of the invisible hand to replace the old and erroneous idea that the pursuit of self-interest robustly benefits the common good. The new version is based on examples of the invisible hand that exist in nature, such as cells that benefit multi-cellular organisms and social insects that benefit their colonies. These lower-level units don’t have the welfare of the higher-level units in mind. They don’t even have minds in the human sense of the word. Instead, they exhibit behaviors that have been winnowed by higher-level selection to benefit the common good. Higher-level selection is the invisible hand.

Absorbing this fact leads to a robust conclusion about the design of our own societies. We must learn to function in two capacities: 1) As designers of social and economic systems; and 2) as participants in the systems that we design. As participants, we need not have the welfare of the whole system in mind, in classic invisible hand fashion. But as design­ers, we must. The invisible hand must be constructed, which would be a contra­diction of terms according to the old concept.

Yet, this does not mean that the invisible hand must be constructed by centralized plan­ning, the main alternative to laissez faire economic policies that is typically imagined. Instead, the design process needs to be evolutionary, iterative, and collaborative, resulting in mechanisms that work like the invisible hand, even though they never could have arisen on their own. This constitutes a middle path between laissez faire and centralized planning that could be a breakthrough in solving the problems of our age....

Evonomics
How to Construct a New Invisible Hand: A Conversation with Peter Barnes
David Sloan Wilson | SUNY Distinguished Professor of Biology and Anthropology at Binghamton University and Arne Næss Chair in Global Justice and the Environment at the University of Oslo

Gavin Kennedy — Lost Legacies Stance of the Invisible Hand Is Endorsed

Weekend reading.

Michael Emmett Brady, California State University, published in the Social Science Research Network (SSRN) he takes giant steps to demolishing Samuelson’s myth. Michael Emmett Brady writes the most significant contribution to the invsisible-hand debate since 1948:

“Who Taught Paul Samuelson the Myth of the “Invisible Hand” at the University of Chicago? The most likely answer is Jacob Viner or fellow student George Stigler” .

 Its author takes the invisible-hand debate onto another level. Brady’s paper is available free via: https://ssrn.com/abstract=3078415

I highly recommend that readers visit the SSRN web site and read Michael Brady’s paper.There is no substitute for reading Michael Emmett Brady’s relatively short paper. It would be invidious for me to attempt to summarise that which is down-loadable in full from SSRN. I shall quote from Brady’s thoughtful contribution below, but I urge readers to follow his whole argument from its SSRN original….

The paper is 24 pages and an easy read.

Adam Smith's Lost Legacy
Lost Legacies Stance of the Invisible Hand Is Endorsed
Gavin Kennedy | Professor Emeritus, Heriot Watt University

Gavin Kennedy — Paul Samuelson's Awesome Error

Certainly, none of Smith’s contemporaries mentioned Smith’s use of the invisible hand. Only in the mid-20th century was that assertion made and believed, thanks to Paul Samuelson’s awesome reputation legitimising his wholly invented error.

Adam Smith's Lost Legacy

Paul Samuelson's Awesome Error

Gavin Kennedy | Professor Emeritus, Heriot Watt University

Gavin Kennedy — Kenneth Arrow And The Invisible Hand

Adam Smith scholar and biographer Gavin Kennedy further exposes the myth of "the invisible hand" originated by Paul Samuelson, after which it went viral. Those who have fallen victim to it are likely exculpable since it is not their business to know the fine points. But economists? It's their field. What is their excuse?

Adam Smith's Lost Legacy

Kenneth Arrow And The Invisible Hand

Gavin Kennedy | Professor Emeritus, Heriot Watt University

Gavin Kennedy — Adam Smith Was A Rhetorician Long Before He Was A Political Economist

Clearing up more confusion on the invisible hand.

Adam Smith's Lost Legacy
SMITH WAS A RHETORICIAN LONG BEFORE HE WAS A POLITICAL ECONOMIST
Gavin Kennedy | Professor Emeritus, Heriot Watt University

Gavin Kennedy — A New Myth Is Born

Appeal to Adam Smith is almost always an argument from authority, a logical fallacy. Moreover, the citation of this authority is usually wrong. It's actually a reference to Paul Samuelson rather than Smith.

Adam Smith's Lost Legacy

A New Myth Is Born

Gavin Kennedy | Professor Emeritus, Heriot Watt University

Gavin Kennedy — Jeffrey Madrick's Quite Wrong Account Of Adam Smith

Oh, and incidently, Adam Smith never mentioned ‘laissez-faire” in his entire writings.

Adam Smith's Lost Legacy
JEFFREY MADRICK'S QUITE WRONG ACCOUNT OF ADAM SMITH
Gavin Kennedy | Professor Emeritus, Heriot Watt University

David S. Wilson — The Invisible Hand is Dead! Long Live the Invisible Hand!

You might think that the old King should be replaced by no King. After all, the metaphor of the invisible hand did not loom very large in Smith’s thought; why should it loom large in ours? It turns out, however, that a robust concept of the invisible hand does emerge from evolutionary and complexity theory, so there is a new King to coronate.

Replacing the mechanical model in econ with an organic model.

Evonomics

The Invisible Hand is Dead! Long Live the Invisible Hand!

David S. Wilson | SUNY Distinguished Professor of Biology and Anthropology at Binghamton University and Arne Næss Chair in Global Justice and the Environment at the University of Oslo

Gavin Kennedy — Samuel Bowles In Error On Adam Smith's Treatment Of Human Bargaining

The otherwise very sharp Sam Bowles blows it in a big way on the history of economics, buying into Paul Samuelson's cartoonish caricature of Adam Smith on the invisible hand. Smith biographer Gavin Kennedy sets him straight. 

Adam Smith's Lost Legacy

Samuel Bowles In Error On Adam Smith's Treatment Of Human Bargaining

Gavin Kennedy | Professor Emeritus, Heriot Watt University

Gavin Kennedy — ADAM SIMTH DID NOT 'FOUND' MODERN CAPITALISM

Gavin Kennedy schools Gillian Tett.

Adam Smith's Lost Legacy
ADAM SIMTH DID NOT 'FOUND' MODERN CAPITALISM
Gavin Kennedy | Professor Emeritus, Heriot Watt University

Jag Bhalla — The Epic Ptolemy-Sized Epicycling Errors of Free Market Fans

Jag Bhalla is a very clear writer. This is an excellent albeit summary smackdown of the assumptions that underlie conventional economic discourse that have shaped the debate even among non-economists. In Steven Colbert's epic takedown, "truthiness." Short and worth a read.

Evonomics
The Epic Ptolemy-Sized Epicycling Errors of Free Market Fans
Jag Bhalla

Peter Turchin — Naked Self-Interest is a Recipe for Social Dissolution (a response to Branko Milanovic)

Must-read.

Cliodynamica — A Blog about the Evolution of Civilizations
Naked Self-Interest is a Recipe for Social Dissolution (a response to Branko Milanovic)
Peter Turchin | Professor in the Department of Ecology and Evolutionary Biology at the University of Connecticut; Research Associate in the School of Anthropology, University of Oxford; and Vice-President of the Evolution Institute
ht Yves Smith at Naked Capitalism

See also John Maynard Keynes, The end of laissez-faire (1926)

This essay, which was published as a pamphlet by the Hogarth Press in July 1926, was based on the Sidney Ball Lecture given by Keynes at Oxford in November 1924 and on a lecture given by him at the University of Berlin in June 1926.

Also

Robert Frank: Ruthless self interest is not a good business strategy (a guest post)
Robert H. Frank is the Henrietta Johnson Louis Professor of Management and a Professor of Economics at the Samuel Curtis Johnson Graduate School of Management at Cornell University

Herbert Gintis: Societies whose business leaders have moral integrity are successful societies (a guest blog)

Herbert Gintis, Professor, Santa Fe Institute, Professor, Central European University, Economics,Emeritus Professor, University of Massachusetts, Economics

Branko Milanovic: The Iron Logic of Gordon Gekko (a guest post)
Branko Milanovic, formerly lead economist in the World Bank’s research department and currently is visiting presidential professor at City University of New York Graduate Center and an affiliated senior scholar at the Luxembourg Income Study

Gavin Kennedy — Why Adam Smith Matters When Reported Accurately

Gavin Kennedy schools Randy Wray in Adam Smith on the invisible hand metaphor.

Adam Smith's Lost Legacy

Why Adam Smith Matters When Reported Accurately

Gavin Kennedy | Professor Emeritus, Heriot Watt University

Gavin Kennedy — At Least One Other Author Sees Through The Modern Myth Of The Invisible Hand

“Yeger”posts on Opinion HERE “The fabricated myth of the invisible hand”

This is the nearest anyone else has gotten to the truth about Adam Smith’s meaning embedded in his reference to the “invisible hand” in only three times that he mentioned it in all of his published Work….

Adam Smith's Lost Legacy

At Least One Other Author Sees Through The Modern Myth Of The Invisible Hand

Gavin Kennedy | Professor Emeritus, Heriot Watt University

Is Economics Built On A "Monumental Mistake?" — Jag Bhalla in conversation with David Sloan Wilson

JB: You’ve called an idea that’s cherished in economics “a monumental mistake.” Specifically, the belief that Adam Smith’s “invisible hand” ensures markets self-organize for the best overall outcomes.

Biological self-organization — Darwin’s “invisible hand” — often delivers disaster. What can self-organization, or spontaneous order, in biology teach economics?

DSW: Self-organization isn’t intrinsically good (it can be functional or dysfunctional).…

Economists will never get it right until they switch their mentality from physics to evolution (see Newton pattern vs. Darwin pattern).

Big Think
Is Economics Built On A "Monumental Mistake?"
Jag Bhalla in conversation with David Sloan Wilson

Gavin Kennedy — Adam Smith’s Metaphoric Use Of The Invisible Hand

[I was asked recently by a well-known and internationally respected Smithian scholar: ”to briefly state what you take Smith in fact to have meant by invoking the IH in the relevant passages in TMS and in WN”. What follows is a slightly edited response as my reply]:

Adam Smith's Lost Legacy
Adam Smith’s Metaphoric Use Of The Invisible Hand
Gavin Kennedy

See also

Smith as sociologist.

Economic Principles
Adam Smith, Theorist
David Warsh

ht Mark Thoma at Economist's View

Gavin Kennedy— Flawed Knowledge Of Adam Smith's Political Economy Yields Poor Results

Hans-Werner Sinn gets Adam Smith egregiously wrong. Sinn is not even in the right century. And that's not all.

Professor Hans-Werner Sinn displays a touching faith in the efficiency of modern States correcting the inefficiencies of modern firms. Governments are often complicit in crony-capitalism when they are ‘captured’ by powerful corporate interests.

Adam Smith's Lost Legacy
Flawed Knowledge Of Adam Smith's Political Economy Yields Poor Results

Gavin Kennedy | Founder and Chairman of Negotiate, and Emeritus Professor at Heriot-Watt University

David F. Ruccio — Bad ideas of mainstream economics

The following post was contributed by Richard McIntyre, in response to Alan Blinder’s review of Jeff Madrick’s book, Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World, in the New York Review of Books.

Occasional Links & Commentary
Bad ideas of mainstream economics
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Gavin Kennedy — Reading Snippets Of Wealth Of Nations Can Be Misleading Out Of Context

Adam Smith did not try “to show that, in a free market, an individual pursuing his own self-interest tends to also promote the good of his community as a whole through a principle that he called “‘the invisible hand’.  He had no such a “principle” called “the invisible hand”.  Moreover, Smith did not “coin”  the “invisible hand” neither as a metaphor nor  as a “principle”.  The metaphor was in fairly common use in the 17th and 18th centuries, mainly, though not solely in theological contexts.  It also appeared in Shakespeare, poetry, general fiction (Defoe), political speeches and philosophy.

Adam Smith's Lost Legacy

Reading Snippets Of Wealth Of Nations Can Be Misleading Out Of Context

Gavin Kennedy | retired Professor of Defence Finance in the Department of Accounting and Finance at Heriot-Watt University and Professor of Economics at Strathclyde University

Peter Radford — Is Economic Orthodoxy Anti-Democracy?

Yes it is.

The explanation is found in the genesis of classical economics and then in its idealization of the marketplace.

"It's the assumptions, stupid."

The Radford Free Press
Is Economic Orthodoxy Anti-Democracy?
Peter Radford