Invisible hand
The invisible hand ( loan translation from invisible hand ) is a metaphorical expression with which the Scottish economist and moral philosopher Adam Smith described the unconscious promotion of the common good. If all actors are oriented towards their own well-being, an assumed partial or complete self-regulation of economic life leads to an optimal production quantity and quality and to a fair distribution . To what extent Smith himself understood this term is controversial. The name has been transferred to other areas such as language, although the concept is not identical to the economic one.
history
The metaphor of the invisible hand was supposedly (criticism see below) in the economic sense known through the economist Adam Smith. Smith uses the metaphor of the invisible hand only three times in all of his works, and each time with a different meaning.
- First, the phrase about the invisible hand of Jupiter appears in an essay on the history of astronomy, where it means that natural processes can be understood even without higher influence. The concept of the invisible hand as a sign of divine influence is rejected as an unscientific concept.
- Adam Smith uses the metaphor a second time in the fourth chapter of his book Theory of Ethical Emotions . There he describes in a microeconomic framework how the wealthy, without intending to do so, are guided by an invisible hand to share their wealth with the poor.
- The best-known and shaping current understanding today is without a doubt the use of the metaphor in the work The Prosperity of Nations , published in 1776 . Smith uses the invisible hand there in the second chapter of the fourth book, in which he deals critically with import restrictions for foreign goods, i.e. in a macro- or micro-economic context.
Adam Smith was not the inventor of the metaphor of the invisible hand; in his day it was a common expression, mostly with religious connotations . When the warship Prince George survived a violent storm in 1703 , which killed several other ships, the commander Martin wrote in the ship's diary: The invisible hand of Providence has saved us . It is debatable whether Adam Smith's metaphor of the invisible hand was understood religiously. In any case, he thought the metaphor was a useful means of making certain connections clear to his contemporaries.
The economist Tomáš Sedláček traces the history of ideas of the "invisible hand" - an evil undertaking of one or more individuals leads to the increased good of society as a whole - and refers to the social theorist Bernard Mandeville and his bee fable before Smith (see Mandeville paradox ) , on the scholastic Thomas Aquinas and finally on the poet Aristophanes : “ According to a legend from ancient times, all our foolish plans and vain conceit are directed towards the common good. "
Theory of ethical feelings
In The Theory of Moral Sentiments (1759), Part IV, Chapter 1, Smith describes a selfish squire who is guided by an invisible hand to distribute the harvest to his workers:
“In vain that the proud and callous landlord lets his gaze wander over his vast fields and devours the whole harvest that grows in these fields himself in his imagination without a thought of the needs of his brothers. The insolent and vulgar adage that the eye can see more than the belly 2) has never been more completely true than in relation to it. The capacity of his stomach is out of proportion to the immeasurable size of his desires, yes, his stomach will not be able to hold more than that of the smallest farmer. The rest he must distribute among those who prepare the little that he needs with the greatest care, among those who furnish and maintain the palace in which this little is to be consumed, among those who take care of all the various junk and trinkets keep in order that is used in the household of the noble; they all get their share of essential goods from his luxury and his caprice, which they would otherwise have expected in vain from his humanity or his justice. The soil yields at all times approximately the number of inhabitants that it is able to sustain. Except that the rich choose from the whole bunch what is most precious and most pleasant to them. They consume little more than the poor; despite their natural selfishness and predatory greed, and though they only have their own convenience in mind, though the only purpose they seek to achieve by the work of all the thousands who employ them is to satisfy their own vain and insatiable desires, nonetheless they share with the poor the proceeds of all the improvements they make in their agriculture. By an invisible hand they are led to achieve almost the same distribution of the goods necessary for life that would have come about if the earth had been distributed equally among all its inhabitants; and thus, without intending to do so, even without knowing it, they promote the interest of society and provide the means for the increase of the species. When Providence distributed the earth among a small number of masters and owners, it did not forget and did not leave completely those whom it apparently passed over in its division. "
In other places in the work, Smith describes people's desire to be recognized and respected and to feel like honest and honorable beings.
The wealth of the nations
Merchants, Smith explains in his book The Wealth of Nations , often invest their capital in their own interest in their own country rather than abroad. He then concludes later in the same chapter:
As every individual, therefore, endeavors as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labor to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest, he frequently promotes that of the society more effectively than when he really intends to promote it.
“If, therefore, each individual tries as much as possible to use his capital to support domestic employment and thereby directs it in such a way that its income allows the highest increase in value to be expected, then each individual inevitably strives to keep the national income in this way will be as big as possible. In fact, as a rule, he does not consciously promote the common good, nor does he know how high his own contribution is. If he prefers to support his own national economy rather than the foreign one, he thinks only of his own security, and if by so doing he promotes gainful employment so that its income can be of the highest value, he is only seeking his own gain. In this, as in many other cases, he is guided by an invisible hand in order to further a purpose which was by no means his intention. Nor is it always the worst thing for society that this was not intended. By pursuing his own interests, he often promotes those of society more effectively than if he actually intended to promote them. "
No single market participant strives directly to maximize the common good; everyone just wants to meet their goods needs. And yet the market mechanism leads through its invisible hand to the economic optimum. The selfish striving of the people or companies in the economy contributes to the well-being of society as a whole in the “system of natural freedom” . By natural freedom , Smith meant a system that is free from monopolies , i.e. one-sided possibility of dominating a market. Only with this restriction can the principle of the invisible hand become effective. It is noticeable that this requirement was not met in Smith's time. Rather, Smith addresses the role of the political economy of his time ( mercantilism ) in his work . In modern economics , cases in which the market mechanism does not produce the economically efficient allocation of goods are referred to as market failures .
The concept of the invisible hand became known through Paul A. Samuelson's standard work "Economics", which was printed millions of times. It shows how the mechanism of the invisible hand leads to an efficient allocation of resources, as well as the restrictive conditions that must be met.
According to Niklas Luhmann , the invisible hand served since the 17th century to deparadox the scarcity paradox and to symbolize a guarantee of progress.
"After she began to suffer increasingly from osteoarthritis, the desideratum of economic growth took over this function itself."
The North American corporate historian Alfred D. Chandler junior contrasts the invisible hand in unplanned market processes with the visible hand of planning management in companies.
From the point of view of emergent self-organization, the invisible hand in economics can be interpreted as an anticipation of the result of pluralistic cooperation: If all actors in economic activity strive for personal success within the framework of appropriate rules, this also leads to economic progress for society in a kind of symbiosis provided that society is not dominated by parasites.
linguistics
According to Rudi Keller , the currently valid norms of language use arise and change in an evolutionary process that, analogous to Adam Smith's concept, appears to be controlled by an invisible hand : Keller describes language as a third-order phenomenon ; By this he means that speech acts in the first order, i.e. on an individual level, are selected in a targeted manner according to certain conditions, the resulting frequent use of certain language forms by different speakers with sometimes similar intentions, however, follows higher-level natural laws that are not based on any intention .
Keller distinguishes phenomena such as language change from intended products (artifacts) of human design and natural phenomena. A traffic jam is also a phenomenon of the third kind, as the drivers do not brake in order to block the road. For safety reasons, everyone braked a little harder than the person in front until a car had to stop completely. Nobody planned the traffic jam (especially not the first to brake) and yet there is a standstill.
Socio-cultural
According to Robert Nozick , the metaphor and the concept of the invisible hand can be used to describe socio-cultural orders that give the impression that they were created by a central planning authority.
As an example of this, Rudi Keller cites the beaten path theory : A network of beaten paths runs across the university campus, which represent the shortest connections between the most important buildings and facilities. This network is laid out much more logically and economically than the cobblestone paths planned by the architect. Although far less intelligence was used to create these beaten paths than to create the paved paths, the system is much more rational than the artificial paths. The invisible hand theory for this system is as follows: It starts with the hypothesis that most people prefer shorter distances to longer ones. However, it can be observed that the paved paths do not correspond to this tendency, since they often do not represent the shortest connections between the most frequent contact points for students. It is common knowledge that lawns wither in places where there is frequent foot traffic. Keller concludes from this that the system of the beaten track is the unintended causal consequence of those (intentional, final) actions that consist of reaching certain goals on foot under the maxim of saving time and energy.
Mikhail Ryklin speaks of "the invisible hand of the almighty GULag ", on whose orders for each of the deportees to the Kolyma "lack of oxygen, the sharp, salty food and thirst" belonged to the program "as well as the extreme cruelty for the guards".
criticism
GWF Hegel in his Jena Realphilosophie and his legal philosophy was an early advocate, but also a critic of the concept . He saw in the mutual dependence of everyone on everyone, the mutual intertwining of everyone , the reason that self-interest always had to take into account and fulfill the interests of others in order to achieve its goal.
"In this dependence and reciprocity of work and the satisfaction of needs, subjective selfishness turns into a contribution to the satisfaction of the needs of all others - into the mediation of the particular through the general as a dialectical movement."
This is a simple dialectical description of a symbiotic pluralistic process. But he did not consider this sufficient, because as a necessary moment in the development of man to reason, this law of civil society is subordinated to the higher sense of the state. State intervention is necessary to compensate for the one-sidedness and shortcomings of the market society.
Hegel rejected Smith's assumption that the invisible hand leads to the general good. In his view, the market order necessarily leads to poverty and misery, which grow with wealth.
“If civil society is in unhindered activity, then within itself it is engaged in advancing population and industry. - Through the generalization of the connection of people through their needs and the ways of preparing and bringing about the means for them, the accumulation of riches increases - for the greatest profit is drawn from this doubled generality - on one side as on the other on the other hand, the isolation and limitation of the particular work and thus the dependence and hardship of the class bound to this work, with which the inability to feel and enjoy the further freedoms and especially the intellectual advantages of bourgeois society is connected. "
Hegel sees the consequence in the regulation of civil society, especially large industries and prices, by the state and voluntary welfare institutions, through redistribution of income and wealth through taxes and through job creation through public contracts. However, according to Hegel's conviction, none of these measures solve the problem of overproduction and the simultaneous shortage, nor does the further tendency of the economic system towards world trade and colonization. From Hegel's analysis results "a theory of pauperization , social polarization , economic imperialism and colonization ."
Interpretation in economics
The concept of the invisible hand is almost always generalized beyond its original use and has become a market-based myth in economics to this day . Before the 20th century the term was not widely used; Alfred Marshall never used the term in his textbook Principles of Economics , nor did William Stanley Jevons in his Theory of Political Economy . Paul Samuelson cites the term in his 1948 textbook:
"Even Adam Smith, the canny Scot whose monumental book," The Wealth of Nations "(1776), represents the beginning of modern economics or political economy-even he was so thrilled by the recognition of an order in the economic system that he proclaimed the mystical principle of the "invisible hand": that each individual in pursuing his own selfish good was led, as if by an invisible hand, to achieve the best good of all, so that any interference with free competition by government was almost certain to be injurious. This unguarded conclusion has done almost as much harm as good in the past century and a half, especially since too often it is all that some of our leading citizens remember, 30 years later, of their college course in economics. "
According to this interpretation, Smith's theory means that consumer freedom and freedom of production result in the market distributing products through prices in such a way that all members of society benefit from them. As a result, almost all economists adopted the idea that Adam Smith had assigned “the market” the function of “general coordinator”.
Léon Walras developed an equilibrium model in which competition in the market leads to utility maximization . Vilfredo Pareto used his Edgeworth-box model to make the optimization clear.
Ludwig von Mises uses “the invisible hand of providence” in his work Human Action . Milton Friedman called Smith's concept “The possibility of cooperation without coercion.” Kaushik Basu called the first welfare theorem the theorem of the invisible hand.
Some economists question the definition of the concept of the invisible hand . Gavin Kennedy, Professor Emeritus at Heriot-Watt University in Edinburgh, Scotland, emphasizes that the modern use of the word as a symbol of free-market capitalism is not what Smith intended. The self-interest- driven decisions of individuals would frequently serve the interests of the community, but the first two sections of his main economic work contained more than sixty examples of negative consequences of selfish behavior. Daniel Klein, on the other hand, sticks to the modern term because of its usefulness. Kennedy insists, however, that Smith's intentions are paramount to today's discussion. As a symbol of freedom and coordination, it should be completely separated from Smith, since Smith gave no meaning to the term, especially not in its current meaning.
Former Professor of Economics at Oxford , DH MacGregor stated:
"The one case in which he referred to the 'invisible hand' was that in which private persons preferred the home trade to the foreign trade, and he held that such preference was in the national interest, since it replaced two domestic capitals while the foreign trade replaced only one. The argument of the was a bad one, since it is the amount of capital that matters, not its subdivision; but the invisible sanction was given to a protectionist idea, not for defense but for employment. It is not surprising that Smith was often quoted in Parliament in support of Protection. His background, like ours today, was private enterprise; but any dogma of non-intervention by government has to make heavy weather in The Wealth of Nations . "
The Harvard -Ökonom Stephen Marglin believes that the term was the most consistent statement from Smith's body of work, but also the missverstandendste.
“Economists have taken this passage to be the first step in the cumulative effort of mainstream economics to prove that a competitive economy provides the largest possible economic pie (the so-called first welfare theorem, which demonstrates the Pareto optimality of a competitive regime). But Smith, it is evident from the context, was making a much narrower argument, namely, that the interests of businessmen in the security of their capital would lead them to invest in the domestic economy even at the sacrifice of somewhat higher returns that might be obtainable from foreign investment. [...]
David Ricardo […] echoed Smith […] [but] Smith's argument is at best incomplete, for it leaves out the role of foreigners' investment in the domestic economy. It would have to be shown that the gain to the British capital stock from the preference of British investors for Britain is greater than the loss to Britain from the preference of Dutch investors for the Netherlands and French investors for France. ""
According to Emma Rothschild, Smith used the term ironically. He made fun of those who believed in the powers of providence. Warren Samuels described it as a means of relating modern economic theory to Smith and, viewed in that way, an interesting example of the development of language.
Even Stephan Schulmeister denies that this original idea is ascribed cope Adam Smith. Rather, it was "projected into him". He himself had “given the metaphor no 'market religious' importance.” In his main economic work, he used it only once and not at all in connection with price formation and competition in the market, but with regard to British foreign trade. Even Smith's immediate successor Thomas Malthus , David Ricardo and John Stuart Mill and Karl Marx they did not mention. Neither did the neoclassics William Stanley Jevons , Carl Menger and Léon Walras , all of whom certainly knew Smith's work very well. It was only with Paul A. Samuelson's textbook Economics (1948) that mystification began.
literature
- Hannelore Bublitz , Irina Kaldrack, Theo Röhle, Hartmut Winkler : Invisible hands. Automatisms in the history of media, technology and discourse . Wilhelm Fink, Munich 2011, ISBN 978-3-7705-5184-2 .
- Ralf Klausnitzer: Invisible threads, invisible hand. History of ideas and figuration of a metaphor complex. In: Concepts, metaphors and imaginations in philosophy and the history of science. (= Wolfenbütteler Research. Volume 120). Edited by Lutz Danneberg , Carlos Spoerhase , Dirk Werle . Harrassowitz, Wiesbaden 2009, ISBN 978-3-447-05938-1 , pp. 145-176.
- Harun Maye: The Invisible Hand. Latent agency in literature and the public in the 18th century. In: The Parallax View. On the mediology of the conspiracy. Edited by Marcus Krause, Arno Meteling, Markus Stauff. Wilhelm Fink, Munich 2011, ISBN 978-3-7705-4906-1 , pp. 183-199.
- Ulrich van Suntum : The invisible hand. Springer, Berlin 2000, ISBN 3-540-25235-5 .
- Ute Tellmann : Foucault and the "Invisible Economy". In: Foucault Studies. 6. Queensland University of Technology , Brisbane February 2009, ISSN 1832-5203 pp. 5-24.
Web links
- Ulrich J. Kühne: How do you explain with invisible hands? In: Ulrich Kühne (1997): How do you explain with invisible hands? In: Ulrich Krause, Manfred Stöckler (Ed.): Modeling and simulation of dynamics with many interacting actors. Bremen University, 1997, pp. 75-86.
- Peter Koch: A look at the invisible hand: cognitive universals and historical Romance lexicology. ( Memento of April 10, 2014 in the Internet Archive ) (PDF file; 306 kB)
- Roland Kirstein , Dieter Schmidtchen: How the “invisible hand” works. Profit maximization as the mainspring of efficiency. 2003. (PDF file; 127 kB)
- The “Invisible Hand”: Advantages and Disadvantages of Unregulated Markets from Adam Smith's Point of View. ( Memento from June 6, 2008 in the Internet Archive )
- The Invisible Hand - Adam Smith's Approach to Solving the Double Contingency. (PDF file; 131 kB)
Individual evidence
- ^ E. Rothschild: Adam Smith and the Invisible Hand. In: The American Economic Review. Vol. 84, No. 2, May 1994, pp. 319-322.
- ↑ Free entry of foreign goods as long as they are imported on British ships. See Smith's approving discussion of the Navigation Act a few pages after the Invisible Hand quote. And in the quote itself, Smith emphasizes the domestic advantage twice .
- ^ DD Raphael: Adam Smith. Campus-Verl, Frankfurt am Main 1991, p. 86.
- ^ Tomáš Sedláček: The economy of good and bad . Carl Hanser Verlag, 2012, ISBN 978-3-446-42823-2 .
- ↑ Alexander Armbruster: Tomás Sedlácek: "The Economy of Good and Evil": The goodwill of the baker can be ignored . In: Frankfurter Allgemeine Zeitung . March 6, 2012, ISSN 0174-4909 ( faz.net [accessed May 9, 2017]).
- ↑ Theory of Ethical Feelings. After the last edition. and with inlet, note and reg. ed. by Walther Eckstein. - Reprint with again exp. Bibliogr. / With a bibliogr. by Günter Gawlick . - Hamburg: Meiner, 1994 (Philosophical Library; Vol. 200a / b) Einheitssacht. : The theory of moral sentiments (German) ISBN 3-7873-1168-8
- ^ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations. Modern Library, New York 1937, p. 423.
- ^ Paul A. Samuelson, William D. Nordhaus: Economics. 16th edition. McGraw-Hill, NY et al. a. 1998, Chapter 16, p. 285.
- ↑ 1988, pp. 99-100.
- ^ Alfred D. Chandler: The Visible Hand: The Managerial Revolution in American Business. Cambridge / Mass. 1977.
- ↑ Günter Dedié: The Power of Natural Laws - Emergence and Collective Abilities from Elementary Particles to Human Society, 2nd edition, tredition 2015
- ↑ D. Acemoglu, JA Robinson: Why Nations Fail - The Origins of Power, Prosperity and Poverty, Fischer 2014
- ^ Francina Ladstätter: The "invisible hand" in language . A critical look at Keller's theory of language change. In: Linguistics online . tape 18 , no. 1 , January 1, 2004, p. 71–92 , doi : 10.13092 / lo.18.767 ( bop.unibe.ch [accessed on April 13, 2020]).
- ↑ Mikhail Ryklin: Life Thrown into the Fire - The Generation of the Great October. Suhrkamp Berlin 2019.
- ↑ Shlomo Avineri : Hegel's theory of the modern state. From the English by R. and R. Wiggershaus (Suhrkamp Taschenbuch Wissenschaft. Volume 146), Frankfurt am Main 1976, p. 178
- ↑ Shlomo Avineri : Hegel's theory of the modern state. From the English by R. and R. Wiggershaus (Suhrkamp Taschenbuch Wissenschaft. Volume 146), Frankfurt am Main 1976, pp. 177/178
- ↑ Shlomo Avineri : Hegel's theory of the modern state. From the English by R. and R. Wiggershaus (Suhrkamp Taschenbuch Wissenschaft. Volume 146), Frankfurt am Main 1976, p. 183
- ↑ Shlomo Avineri : Hegel's theory of the modern state. From the English by R. and R. Wiggershaus (Suhrkamp Taschenbuch Wissenschaft. Volume 146), Frankfurt am Main 1976, p. 185
- ^ A. Marshall, Principles of Economics, 1890
- ^ S. Jevon, The Theory of Political Economy , 1871
- ^ Paul Samuelson, Economics, 1948
- ↑ Stephan Schulmeister: The way to prosperity , Ecowin, Munich 2018. P. 50.
- ↑ Ludwig von Mises (2009), Human Action: Scholar's Edition, Ludwig von Mises Institute
- ^ Friedman's Introduction to I, Pencil
- ^ Kaushik Basu : Beyond the Invisible Hand: Groundwork for a New Economics . Princeton University Press , Princeton, NJ 2010, ISBN 978-0-691-13716-2 .
- ↑ Kennedy, Gavin. 2009. Adam Smith and the Invisible Hand: From Metaphor to Myth. Econ Journal Watch 6 (2): 239-263.
- ↑ Kennedy, Gavin. 2009. Adam Smith and the Invisible Hand: From Metaphor to Myth. Econ Journal Watch 6 (2), p. 255: "Smith gives over 60 instances in Wealth of Nations in books I and II of the malign consequences of self-interested actions." [1]
- ↑ Klein, Daniel B. 2009. In "Adam Smith's Invisible Hands: Comment on Gavin Kennedy". Econ Journal Watch 6 (2): 264-279.
- ↑ Kennedy, Gavin. "A Reply to Daniel Klein on Adam Smith and the Invisible Hand". Econ Journal Watch 6 (3): 374-388.
- ^ DH MacGregor, Economic Thought and Policy (London: Oxford University Press, 1949), pp. 81-82.
- ↑ Stephen Marglin : The Dismal Science: How Thinking Like an Economist Undermines Community . Harvard University Press , Cambridge, MA 2008, ISBN 978-0-674-02654-4 , p. 99 n.1 .
- ↑ Emma Rothschild , Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment . Harvard University Press , Cambridge, MA 2001, ISBN 978-0-674-00489-4 , pp. 138-142.
- ^ Warren J. Samuels: Erasing the Invisible Hand: Essays on an Elusive and Misused Concept in Economics . Cambridge University Press, 2011, ISBN 978-1-139-49835-7 ( google.de [accessed May 9, 2017]).
- ↑ Stephan Schulmeister: The Path to Prosperity , Ecowin, Munich 2018. P. 48 f.
- ↑ Readable in English: (online) . Presentation of her theses in Die Tageszeitung , July 24, 2012, p. 17, by Isolde Charim . Tellmann has dealt with it in other publications, also in German