The Mystery of Adam Smith’s Invisible Hand Resolved
by Mark Thornton (Mises Institute; Auburn University)
Several new interpretations of Adam Smith’s invisible hand have recently been published in leading general-interest economic journals. These interpretations attempt to bring Smith forward in time, to make him more modern, and to fashion him in the image of the modern general equilibrium welfare theorist. Here we go back in time and find the source for both of Smith’s economic applications of the invisible hand in Richard Cantillon’s model of the isolated estate. With this connection established, we know what Smith read and dubbed the invisible hand.
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Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.
Of course, he made this quote before Darwin set sail for the Gallopagos and turned us all into monkeys.
Had Adam Smith known better he might have said something like this:
Production is the sole end of production where bye a pecking order is maintained.
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