300 years ago was born the Scottish economist Adam Smith, often presented as the father of liberal capitalism and a great defender of the free market, perhaps less of laissez-faire. From the immensity of his work, the popular conscience today retains this famous “invisible hand”, an expression that is nonetheless reductive and subject to many recoveries or interpretations throughout history. An invisible hand which, if interpreted at the first level today, would find its finest example of concrete manifestation in the digital universe. With all the failures that we know.
We are talking here about a universe currently immersed in the heart of a debate on a necessary regulation of an artificial intelligence making fear Armageddon even by its developers and its creators. Where we defend the existence of an anti-system digital currency multiplying the crashes on the market, launched in the wake of the financial crisis of 2008, which wants to be non-fiduciary and which its followers wish free from any intervention by central banks and the influence of the US dollar. Where states are struggling to counter the omnipotence of tech giants and the oligopolistic hegemony of the giants that make up GAFAM. And where decentralized finance, when unbridled, multiplies the faults, as evidenced by a rather disastrous year 2022 in the cryptosphere.
According to the interpretation they make of it, to this invisible hand the proponents of “long-termism” will oppose the philosophical thesis arguing that left to itself, humanity can only head towards the apocalypse.
On the La-Philosophie.com site, there is a short summary of interest. If it is not governed as such by an invisible hand, reality would present phenomena of this type, that is to say situations where an order emerges naturally or spontaneously, without desired or conscious coordination of the actors. “This is particularly the case on the Internet, where activities develop from individual initiatives, without a central authority and generally several years ahead of the regulator”, we read.
Is this what Adam Smith defended as an economic model?
Little summary
On the Economist website, there is a good summary of the “invisible hand”. “According to this colorful expression, there is a natural process by which the search by each of his personal interest contributes to the general interest. Adam Smith thus considers that the pursuit of individual interest (or “the tendency of each man to improve his lot unceasingly”) entails for each a behavior which has the effect of leading, at the level of the nation, to the best possible economic organization. »
“For this author, the ‘selfish’ motive which leads each individual to improve his economic situation therefore generates beneficial effects on the national level by achieving the general interest as if individuals were ‘led’ without their knowledge by an ‘invisible hand’. ”, a true self-regulating mechanism of the market which, thanks to competition, allows an optimal use of productive resources. In this respect, it is advisable not to involve the State at the economic level so as not to disturb this spontaneous natural order based on the personal interest of each individual. On this last point, it should be remembered that his thought was articulated in a context of corporatism supported by the monarchical state.
A “selfish” motive which would be “rational” in addition, as if the assumption of the rationality of the individual often implied in the econometric models were obvious.
A metaphor
Like Nostradamus, Adam Smith’s theses, theories and observations have had their share of exegetes over the course of history, opening the way to sometimes interested, even opportunistic understandings or recoveries. And this, even if, contrary this time to the one who multiplied the prophecies challenging the imagination, Adam Smith deploys his thought and his theories with clarity. But as for the expression that we retain today as being the main concept of its contribution to the understanding of economic science, it should rather be relegated to the rank of metaphor.
Returning to the La-Philo site, it appears that the expression appears only three times in all of the economist’s work. Only once in history of astronomyonly once in Theory of Moral Sentiments and only once The Wealth of Nations. We are therefore talking about a rather marginal portion of Adam Smith’s thought. And of a sense of expression given to it by the author, which may vary from one book to another. Especially since in economics, Adam Smith recognized that even in an economy driven by personal interest, an excessively accentuated division of labor had deleterious effects, market efficiency had its limits, the emergence of crises testified of their imperfection, and the appearance of monopolies, imbalances and inequalities are all justifications for state regulation.
On this point, La-Philo takes up a defended thesis suggesting that “the very place of the expression of the invisible hand, the market, seems rather to be a creation of the State rather than a spontaneous phenomenon. From this point of view, there would exist a very visible hand, that of the State. »
Between a so-called “market socialist” economy, where capitalism is expressed under totalitarian political control, and liberalism advocating laissez-faire, Adam Smith’s “invisible hand” can take on several meanings. Even that of irony.