Sadly, economics is not yet a science, but still mostly a hodgepodge of philosophy, superstition, and politics, where the fragile beginnings of scientific inquiry and real science are regularly run over by louder, dumber voices shrieking about "free markets" (an oxymoron) and "supply side" (a bald rationalization for providing welfare to the wealthy). Millions of people know Adam Smith only by his "invisible hand" analogy, which appears only once in the entire book and in a completely different context from that which it is usually quoted---he was talking about the tendency of business to buy local because of familiarity, not making some broad claim about the self-regulation of markets.

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bigbadfeline 7 hours ago | parent [-]

> Sadly, economics is not yet a science,

Nor is there any visible attempt to make it a science.

> Millions of people know Adam Smith only by his "invisible hand" analogy, which appears only once in the entire book and in a completely different context... the tendency of business to buy local.

That's quite a stretch, I mean, it's your right to second-guess Smith as much as you like, and ascribe some "invisible" intent behind his writing, but the text doesn't support your view.

Anyone can read Book 4, Chap 2, where the paragraph in question appears. The whole chapter is full of incessant, obsessive ramblings against regulation in order to "prove" that self-serving, unregulated action always and automatically does better than any regulation motivated by care for the social good. Smith spells it out black on white in par. 4:

Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society

Then Smith uses this insinuation, is if it were a universal principle, to imply the "free trade" rabbit out of his hat - "Secondly, every individual who employs his capital in the support of domestic industry, necessarily endeavours so to direct that industry, that its produce may be of the greatest possible value".

> real science [is] run over by louder, dumber voices shrieking about "free markets" (an oxymoron)

Well, Smith was a free trader, and in that light, he claimed restrictions to free trade are the foundation of all other market regulations, which makes them bad by implication. Smith was a PR BS-generator.

Bk4, Ch 3, part 2 - "Nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost _all the other regulations of commerce, are founded_ ... But that trade which, _without force or constraint_, is naturally and regularly carried on between _any two places_, is always advantageous."

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vannevar 6 hours ago | parent [-]

>> Sadly, economics is not yet a science,

>Nor is there any visible attempt to make it a science.

This will come as quite a surprise to the complexity theorists studying economics as a complex adaptive system. But you prove my point, the cacophony of pseudoscience overwhelms whatever incremental progress real science makes in economics.

>> Millions of people know Adam Smith only by his "invisible hand" analogy, which appears only once in the entire book and in a completely different context... the tendency of business to buy local.

>That's quite a stretch, I mean, it's your right to second-guess Smith as much as you like, and ascribe some "invisible" intent behind his writing, but the text doesn't support your view.

You may count yourself among the millions misinterpreting Smith's reference. Here is your quote again, this time with the relevant context:

"But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours 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 maybe of the greatest value; every individual necessarily labours 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 no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it."

He's pointing out that people have a natural tendency to buy local, and so, while only consciously intending to benefit themselves, they actually end up benefiting their entire community as though guided by an invisible hand. The language seems pretty plain to me, but as you say, you are free to interpret or misinterpret it as you wish.

>> real science [is] run over by louder, dumber voices shrieking about "free markets" (an oxymoron)

>Well, Smith was a free trader, and in that light, he claimed restrictions to free trade are the foundation of all other market regulations, which makes them bad by implication. Smith was a PR BS-generator.

"Free trade" as a useful concept generally belongs on the same trash heap as "free markets"; neither trade nor markets as we know them exist without considerable regulation. We can certainly argue about the degree and nature of the regulations, but the simpleminded notion that "less regulation equals better markets" is simply wrong. As for Smith, he lived in a time where international trade was heavily centralized around governments. When he spoke of "free trade", he was really referring to private trade, independent of the government monopolies of the day. You could certainly think of this as a form of deregulation, but it was really more a case of advocacy for legalization.

>Bk4, Ch 3, part 2 - "Nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost _all the other regulations of commerce, are founded_ ... But that trade which, _without force or constraint_, is naturally and regularly carried on between _any two places_, is always advantageous."

I'd certainly agree with Smith about trade deficits, which fall into the realm of purely political misuse of economics. And when he speaks of "constraints" here, he's saying the government shouldn't dictate specific commodity purchases, not that the government shouldn't have sensible regulations like requiring safety features on private vessels or prohibiting the shipment of dangerous goods without proper inspections and permitting.

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bigbadfeline 5 hours ago | parent [-]

> I'd certainly agree with Smith about trade deficits,

So you agree that "Nothing, can be more absurd than this whole doctrine of the balance of trade"?

Further, let's look at these two claims in your quote of Smith:

(A) > "every individual necessarily labours 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."

So when in (A) Smith says "every individual" and "generally", he doesn't mean it, he means specifically claim (B) "By preferring the support of domestic to that of foreign industry... he intends only his own gain"

Isn't it obvious that Smith uses the sucked-out-of-thumbs claim (A) to "derive" claim (B) as a special case?

You simply refuse to address the text, focusing on your second-guessing instead. Besides, you're completely oblivious to Smith's opinions stated as facts, because in the above quotes, neither the general nor the specific claims are true. They're just "I say so".

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vannevar 4 hours ago | parent [-]

>Isn't it obvious that Smith uses the sucked-out-of-thumbs claim (A) to "derive" claim (B) as a special case?

No, it is not obvious. If the general claim were so important, why then focus on the specific case?

>You simply refuse to address the text, focusing on your second-guessing instead. Besides, you're completely oblivious to Smith's opinions stated as facts, because in the above quotes, neither the general nor the specific claims are true. They're just "I say so".

Ha, if that isn't the pot calling the kettle black. You're simply taking the popularized (and incorrect) interpretation and retroactively fitting it to the narrower original without paying any attention to the plain words on the page. When I first read WoN, I was shocked that the whole "invisible hand" thing was not only not the central theme of the book, it wasn't even the central theme of the chapter it appears in. WoN is not about deregulating industry, it's about creating the modern idea of industry in the first place. Smith never gets to the issue of how industry should be regulated, because he's preoccupied with advocating for the very idea of private industry in a world where, internationally, it's the exception.

	▲	bigbadfeline 3 hours ago \| parent [-]
		> If the general claim were so important, why then focus on the specific case? To make his poorly supported claims look more believable, I've explained that in detail already. > the whole "invisible hand" thing was not only not the central theme of the book, it wasn't even the central theme of the chapter it appears in. It's a profusely and clearly expressed claim even without being the central theme. Indeed, why should it be? Besides, what's the central theme? It doesn't seem to be anything related to science. > Smith never gets to the issue of how industry should be regulated, His preference for the "invisible hand" and his distaste for regulation are plainly visible, we talked about that too. However, if he wrote these as some sort of passing remarks, he clearly missed the central role of regulation in the economy, without that, it's "economics" without science. Using the invisible hand to sweep the issue under the carpet creates only confusion. > because he's preoccupied with advocating for the very idea of private industry Calling his writings "advocacy" is indeed the correct approach. Very far from anything approaching science though.