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Divine Action, Providence and Adam Smith’s Invisible Hand

Authors:
  • Alphacrucis College and Australian Catholic University

Abstract

Recent sustained attention the background of Adam Smith's invisible hand has not resolved its meaning. In particular the status of the older dominant interpretation that the hand is God's remains unclear. This paper argues that a more nuanced understanding of divine action, drawing on Isaac Newton's understanding of special and general providence is the key to understanding Smith's invisible hand. The invisible hand is the special providential hand of God, which works to maintain the stability of the system, for instance by restraining inequality and keeping capital at home. Viewing the hand in this way clarifies its relationship to Smith larger argument about the unintended consequences of self-interested human action in a free economy.
Work in Progress – Comments Welcome
DIVINE ACTION, PROVIDENCE AND
ADAM SMITHS INVISIBLE HAND
Paul Oslington
Professor of Economics, University of Notre Dame Australia, 104 Broadway, Sydney
2007. Visiting Fellow, St Marks National Theological Centre and Australian Centre
for Christianity and Culture, Canberra 2600. Email: poslington@nd.edu.au
JEL subject categories: B120, Z000.
JEL keywords: Adam Smith, Isaac Newton, Invisible Hand, Providence.
* The paper was begun during my 2006-7 sabbatical leave as a visiting scholar at
Princeton Theological Seminary and Princeton University, and an early was version
presented at the Center for Theological Inquiry Princeton. I thank John Hedley
Brooke, Peter Harrison, Anthony Waterman and Margaret Schabas for helpful
conversations about the invisible hand, with the usual caveat.
Abstract
Recent sustained attention the background of Adam Smith’s invisible hand has not resolved
its meaning. In particular the status of the older dominant interpretation that the hand is
God’s remains unclear. This paper argues that a more nuanced understanding of divine
action, drawing on Isaac Newton’s understanding of special and general providence is the
key to understanding Smith’s invisible hand. The invisible hand is the special providential
hand of God, which works to maintain the stability of the system, for instance by restraining
inequality and keeping capital at home. Viewing the hand in this way clarifies its
relationship to Smith larger argument about the unintended consequences of self-interested
human action in a free economy.
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“Modern professors of economics and ethics operate in disciplines which have been secularised to
the point where the religious elements and implications which were once an integral part of them
have been painstakingly eliminated … [scholars] either put on mental blinders which hide from their
sight these aberrations of Smith’s thought, or they treat them as merely traditional and in Smith’s day
fashionable ornaments to what is essentially naturalistic and rational analysis… I am obliged to insist
that Adam Smith’s system of thought, including his economics, is not intelligible if one disregards the
role he assigns in it to the teleological elements, to the invisible hand” Jacob Viner The Role of
Providence in the Social Order 1972 p81-82
1) INTRODUCTION
Adam Smith’s invisible hand is perhaps the most famous image in economics, but one which
has puzzled interpreters. It is also significant as focus for disputes over the capacities of
markets. For some the Smithian hand summarizes the case for a market economy – Mark
Blaug writes: “Under certain social arrangements, which we would nowadays describe as
workable competition, private interests are reconciled with public interests as if by an
invisible hand” (Blaug 1997 p60). For Deirdre McCloskey (2006 p456-8) the hand
reconciles private virtuous action with the common good. Critics (such as Duncan Foley
2006) interpret the hand in a similar way but regard it as summarizing the errors of the case
for the market economy; Adam Smith’s mistake which has cursed subsequent economic
analysis.
The problem is that we still don’t know what Smith’s invisible hand means, despite huge
amounts of ink spilt on the topic. 19th century interpreters emphasised the theological
connections of Smith’s work – for Thomas Chalmers there was no doubt God was at work in
a market economy: “ the greatest economic good is rendered to the community...by the
spontaneous play and busy competition of many thousand wills, each bent on the persecution
of his own selfishness … which bespeak the skill of a master-hand, in the adjustment of its
laws, and the working of its profoundly constructed mechanism” (Chalmers 1833 p238,
240). Richard Whately, holder of the first chair of political economy at a British University
– the Drummond Professor at Oxford - interprets Smith as arguing that “Man is, in the same
act, doing one thing by choice, for his own benefit, and another, undesignedly, under the care
of Providence, for the service of the community” (Whately 1832 p94). Examples from
influential 19th century economists could be multiplied almost indefinitely. Interestingly
though, none of the early interpreters pay much attention to the invisible hand passages.
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At a symposium to mark the 150th anniversary of the Wealth of Nations Jacob Viner
emphasized Smith’s providentialism embedded in a natural theological system, and
identified the invisible hand with providence. Viner is emphatic: “the essence eof Smith’s
doctrine is that Providence has so fashioned the constitution of external nature as to make its
processes favourable to man, and has implanted ab initio in human nature such sentiments as
would bring about… the happiness and welfare of mankind” (Viner 1927 p201-2), and:
“The harmony and beneficence to be perceived in the matter-of-fact processes of nature are
the results of the design and intervention of a benevolent God” (Viner 1927 p202).
Through the twentieth century fewer scholars have emphasised Smith’s theological
connections, and most recent work takes it as obvious that the invisible hand has no
connection with God. For instance Karen Vaughn (1987) does not consider the possibility
of divine involvement in her description of a process of social order emerging as an
unintended consequence of self interested human action. Rothschild (1994) dismisses the
suggestion that it might be the hand of God, and concludes after examining several other
interpretations that Smith “did not particularly esteem the invisible hand and thought of it as
an ironic but useful joke” (p319). Grampp (2000) focuses on the hand in the Wealth of
Nations and argues that it makes a specific point about capital flows and national defence,
and is not part of any general argument Smith might be making about self interest and social
order. He dismisses far too hastily (two paragraphs on p449) the suggestion of earlier
scholars he names (Viner, Spiegel and Evensky) that God has something to do with the hand.
This is curious since he seems to concede that the hand is providential in the Theory of
Moral Sentiments. Donald Winch (1996) wisely suspends judgement on the theological
connections, as being outside his expertise.
Some recent scholarship seeks to understand Adam Smith better by placing his work in
various 18th century contexts – including the scientific and religious context of the Scottish
Enlightenment (for instance Stewart 2003, Waterman 2004, Hill 2001, Long 2006). This
paper suggests that the key to understanding Smith’s references to the invisible hand is an
appreciation of 18th century natural theological accounts of divine action and providence, in
particular the distinction between special and general providence. In a sense the paper
develops Jacob Viner’s insistence on the importance of the doctrine of providence for
interpreting Smith. An understanding of the invisible hand as special providence clarifies
Smith’s larger argument about the consequences of self-interested human action in a free
economy.
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2) NATURAL THEOLOGY
There are many contexts for reading Smith but the most important for understanding the
invisible hand is British tradition of scientific natural theology (Brooke 1991). This was
the organising intellectual framework for the majority of British scientists from the 17th the
till the early 19th centuries including Francis Bacon, Robert Boyle, Isaac Newton, John Ray,
and William Paley with William Whewell perhaps marking the end point. Natural theology
is often misunderstood as a project of proving God’s existence without recourse to revelation
– in my view a vain and pointless undertaking. However the project of these British
scientists was a different one of deepening understanding of God’s nature and activity
through studying God’s creation. Such a project rests on the revealed doctrines of creation
and providence. From the 17th the till the 19th century natural theology functioned to
legitimate scientific activity (e.g Boyle describing himself as a priest in the temple of
nature), to provide a common language and non-sectarian religious basis for scientific work,
and occasionally to suggest and select theories (e.g. the universality of gravity).
I argue (Oslington 2005 and forthcoming) that Adam Smith and other early economists
should be placed in this tradition of natural theology. For Smith there is considerable
biographical warrant for this, including his moderate Calvinist upbringing and interest in
Stoic natural theological systems. We also know that the first part of Smith’s Glasgow
lectures which later developed into the Theory of Moral Sentiments and Wealth of Nations
were on natural theology. A student John Millar reported, “His course of lectures ... was
delivered in four parts. The first contained Natural Theology; in which he considered the
proofs of the being and attributes of God, and those principles of the mind on which religion
is founded” (reproduced in Dugald Stewart’s Account of the Life and Writings of Adam
Smith, published in Smith 1795 p274). The content of Smith’s lectures on natural theology
is an intriguing question which we might wish John Millar or Dugald Stewart to have
elaborated on, but some indications can be gained from the published lectures of Smith’s
predecessors Gershom Carmichael and Frances Hutcheson. In Smith’s own published works
the standard language and arguments of the British tradition can be identified1.
Whatever view one takes of Smith as a natural theologian, nobody disputes that that Newton
was a central figure in that tradition. All I require for the argument of this paper is to show
1 Placing Smith in the tradition of British natural theology does not depend on Smith being personally devout or
orthodox in his Christian faith. It is difficult to judge Smith’s personal faith on the evidence available.
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that it is plausible that Smith’s view of divine action and providence was influenced by
Newton’s.
It would be very strange if anyone in Britain in Smith’s time could write on these matters
without being influenced by Newton, but for Smith we have evidence that the influence of
Newton was large and positive. We know that Newton was a scientific hero of the young
Smith (Ross 1995 p55-7), that Smith was a familiar with Newton’s works through his
Scottish interpreter Sir Colin Maclaurin as well as the original texts (Ross 1995 p99-101),
that Smith’s History of Astronomy essay set up Newton as the model for scientific enquiry,
and that the first readers of the Wealth of Nations such as Governor Pownall commented on
its Newtoniansim (Ross 1995 p429)2 .
3) DIVINE ACTION AND PROVIDENCE IN NEWTON
Isaac Newton’s view of divine action and providence is the background to the interpretation
I am offering of Smith’s invisible hand, and so must now be briefly outlined. Providence is
one the core doctrines of Christianity, with a long history. It is distinguished from the
doctrine of creation, God’s finished work, in that God’s providential care for the world
continues. It also differs from creation in that the created order is good, while the present
order under God’s care is not. Providence is also distinguished from the doctrine of
redemption, God’s restorative activity through Christ, as providence has more modest
maintenance role. Helm (1993) is a good discussion of the doctrinal issues.
Newton affirms a strong version of the doctrine of providence. In his universe is that
everything that happens is in some sense and act of God3. For scientific work a crucial
2 Reading Smith as a Newtonian in his approach to divine action leaves open the question of how Newtonian
his economics is in other ways. Smith’s enthusiasm is for the Newtonian method, and analogies of content of
specific theories such as between Smithian accounts of price formation and Newtonian accounts of gravity
seem to me more tenuous. Interpreting Smith as a general equilibrium theorist on the basis of analogies with
Newton’s system has been rightly criticized by Redmond (1993) and Montes (2003).
3 This touches the question of theological voluntarism and its relationship to the development of modern
science. Voluntarism emphasises God’s arbitrary will over his intellect, and the dependence eof the universe
on this will. The argument goes that theological voluntarism implies a contingent natural order which is
amenable to empirical investigation, and this encouraged the development of modern science. Harrison (1995,
2002) discusses the issue extensively and in my view persuasively. It seems doubtful that Newton was a
voluntarist, and what influence any voluntarist elements in his theology had on his scientific work .
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question is how regular or lawlike is God’s activity. Newton along with many other British
natural philosophers believed that explaining universe in terms of regular laws made divine
involvement more rather than less plausible. Mechanistic images such as the clockwork
universe showed the wisdom and power of God. In contrast European scientists such as
Laplace believed explanation in terms of regular laws made God unnecessary.
Newton followed the theological tradition in distinguishing between general providence -
God’s care expressed in the regularity of the universe - and special providence - God’s
irregular acts. Newton sums this up nicely in correspondence: God is “constantly
cooperating with all things in accordance with accurate laws, as being the foundation and
cause of the whole of nature, except where it is good to act otherwise” (MS245 folio 14a in
the Library of the Royal Society London, as quoted in Force 1990 p87). A similar view is
expressed by William Whiston, Newton’s successor as Lucasian Professor of Mathematics at
Cambridge, who distinguishes between “God’s ordinary providence displayed in lawful
operation of secondary causes”, and “God’s special, direct interventionist providence” (A
New Theory of the Earth 1708, quoted in Force 1990 p86). There is no sense in which any
irregular actions of God undermine or are inconsistent with God’s regular action. Both are
equally and consistently acts of God4.
For Newton it is not just that special providential action is allowable, whatever that means
for an omnipotent God, but that God has willed a universe where such action is required
(Brooke 1991 p147). Newton could not see how anything other than a one-off divine action
could set the planets in motion. Moreover, in the Principia Newton speaks the orbits of
planets needing periodic adjustment, and of comets tails restoring matter lost by the Sun and
planets (discussed Brooke 1991 p148). In Query 31 of the Optiks where Newton speaks of
“irregularities” which may have arisen from the mutual interactions of planets and comets
which increase till system “wants a reformulation” (the passage is in Janiak p138). The need
for continuing divine intervention and these examples are discussed in Maclaurin’s (1748)
account of Newton’s system, with which Smith knew well. Such examples were ridiculed
by Leibniz who felt such running repairs reflected badly on God’s design of the universe.
4 Miracles are distinguished by infrequency, rather than being violations of natural laws. Newton would have
found Hume’s framing of the problem of miracles strange indeed, and Hume’s separation of the natural order
from its creator theologically worrying.
6
Newton was fond of the analogy that God could move the universe as we move our bodies,
although he rejected pantheism that made God the soul of the universe (Brooke 1988 p169).
In Query 31 of the Optiks Newton describes God as a “powerful ever-living Agent, who
being in all places is more able by his will to move the bodies within his boundless and
uniform sensorium, and thereby to reform the parts of the universe, than we are by our will
to move the parts of our own bodies” (Janiak p138). Another example of this body imagery
is a 1692 letter to Bentley where Newton describes a “divine arm” placing planets (Janiak
p100).
So a divine hand acting irregularly to maintain the order is perfectly legitimate within the
Newtonian view of divine action, and has precedents in Newton’s own discussion of the
planetary system. Was this what Smith had in mind? We must turn to the passages in
Smith.
4) SMITH’S PROVIDENTIALISM
We now need to ask what view Smith took of providence, given that providence was one of
the key doctrine for natural theologians, and Newton, and I would also argue Smith, were
natural theologians. Newton’s doctrine of providence as we have seen distinguishes between
special and general providence.
There can be do doubt of Smith’s attachment to the doctrine of providence.. His published
works are so full of providentialist language that they can be read as developing the
mechanisms divine of providence in the economic realm: Here are a couple of the many
examples:
“All the inhabitants of the universe, the meanest as well as the greatest, are under the
immediate care and protection of that great, benevolent ands all-wise Being, who directs all
the movements of nature; and who is determined, by his own unalterable perfections to
maintain in it at all times, the greatest quantity of happiness” (Smith 1959 p235).
“In every part of the universe we observe means adjusted with the nicest artifice to the ends
which they are intended to produce, and admire how everything is contrived for advancing
the two great purposes of nature, the support of the individual and the propagation of the
species…[and studying this leads us to admire] the wisdom of man, which in reality is the
wisdom of God” Smith (1759 p87).
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Both these examples are from the Theory of Moral Sentiments, in the Wealth of Nations the
providentialist language is more muted. The obvious explanation of is that the Wealth of
Nations it is a work of economics rather than moral philosophy. Smith seems to have
followed Newton who was expansive about theology in some of his works, especially when
outlining methodology or defending it in correspondence, but hardly mentions theology in
his major scientific treatise the Principia. Maclaurin (1748 p380) notes this difference
across Newton’s works observing that in the Principia Newton was “eminently distinguished
for his caution and circumspection in treating of this subject [the chapter is entitled “Of the
Supreme Author and Governor of the Universe]”.
Another reason for the difference suggested by Viner (1927) is that Smith needed to make
theological space in the Wealth of Nations for an exploration of the imperfections of the
economic system. Imperfections and evil have to be dealt with in any providentialist system,
as Smith and his contemporaries were aware – but this is not the place to go fully into
Smith’s theodicy of economic life5.
One explanation of the difference that doesn’t work is that Smith later rejected the doctrine
of providence between the writing of the Theory of Moral Sentiments and the Wealth of
Nations. It doesn’t work because Smith continued revising both works until his death,
without toning down the providentialist language.
If we accept Smith’s providentialism, then the next question is the relationship of the
invisible hand passages to his providentialism. Most of the interpreters who favour a
theological interpretation of the hand have tried to absorb the hand into the general
providentialist theme of Smith’s work. I will argue that this is a mistake; reading the
passages against the background of the Newtonian theology of divine action and providence
leads us to an invisible hand which is special providence, operating against, although
ultimately supporting general providence in the economic realm.
5 There has been little discussion of Smith’s theodicy, certainly in comparison to the large literature Malthus’
theodicy. Waterman (2004) suggests that Smith can be read as offering a theodicy where markets restrain sin,
in a similar way to the way government does for Augustine. Long (2002, 2006) also discusses theodicy. The
subject needs to be explored further.
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5) THE INVISIBLE HAND PASSAGES
(i) History of Astronomy
The first of the three appearances of the invisible hand in Adam Smith’s work is the History
of Astronomy essay, probably begun in the 1740s, polished in Edinburgh before reaching
final form about 1758, and published in 1790 after Smith’s death (Ross 1995 p99).
The History of Astronomy III 2-3 passage may be found on p48-50 of the standard edition of
Essays on Philosophical Subjects. It appears as part of an argument about the origin of
philosophy, in a section discussing an “invisible and designing power” “whose operations
are not perfectly regular” (p49), and especially how the ancient polytheists viewed with such
a power.
Smith suggested the ancient polytheists ascribe only the irregular events to the designing
power. The text is: “For it may be observed, that in all Polytheistic religions, among
savages, as well as in the early ages of Heathen antiquity, it is the irregular events of nature
only that are ascribed to the agency and power of their gods. Fire burns, and water refreshes;
heavy bodies descend, and lighter substances fly upwards, by the necessity of their own
nature; nor was the invisible hand of Jupiter ever apprehended to be employed in those
matters. But thunder and lightning, storms and sunshine, those more irregular events, were
ascribed to his favour, or his anger”(p49-50)
To reinforce the point Smith adds “ intelligent beings, whom they imagined, but knew not,
… did not to employ themselves in supporting the ordinary course of things, which went on
of its own accord, but to stop, to thwart, and to disturb it. And thus, in the first ages of the
world, the lowest and most pusillanimous superstition supplied the place of philosophy”
(p50)
But then as philosophy develops the regular events come to be ascribed to this power. Smith
suggests wonder drives the process of explaining the regular events, when security and
leisure make it possible. The text is: “But when law has established order and security, and
subsistence ceases to be precarious, the curiosity of mankind is increased, and their fears are
diminished. The leisure which they then enjoy renders them more attentive to the
appearances of nature, more observant of her smallest irregularities, and more desirous to
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know the chain which links them all together. ….Wonder, therefore, and not any
expectation of advantage from its discoveries, is the first principle which prompts mankind
to the study of Philosophy, of that science which pretends to lay open the concealed
connections that unite the various appearances of nature” (p50-51)
There could be some debate about the status of the irregular events after the rise of
philosophy – Smith leaves this somewhat ambiguous – but in my view the natural way to
read the passage is that the perception of divine involvement in the regular events is added to
rather than replaces the perception of the divine in irregular events. Smith seems to be
playing here with an image he will develop further in his mature works.
The most important discussion of the History of Astronomy passage is by Alec Macfie
(1971), who incidentally corresponded extensively with Viner about Smith and theology.
Macfie finds the reference to the invisible hand in the History of Astronomy puzzling,
especially the way irregular events are attributed to the gods, seemingly in contradiction of
the other invisible hand passages. In the end he suggests this early and somewhat ambiguous
reference should not overshadow the later “classic” expressions of the invisible hand idea.
Interpreting the hand as special providence in each of the three instances resolves Macfie’s
contradiction, and brings the hand of the History of Astronomy into line with the other hands,
to which we now turn.
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(ii) Theory of Moral Sentiments
The second invisible hand passage is in the Theory of Moral Sentiments IV I 10 (Smith 1759
p185). It is a discussion of a rich man endowed with insatiable desires yet with a stomach
of limited capacity, so that he consumes only as much as a poor man. It is in this sense that
the rich are “led by an invisible hand to make nearly the same division of the necessaries of
life, which would have been made, had the earth been divided into equal portions among its
inhabitants, and thus without intending it, without knowing it, advance the interest of the
society”.
The hand here is working against the rapacity of the rich, levelling out consumption, and
maintaining the stability of the system. Smith understands that the stability a market
economy depends on a modicum of justice and a not too obscenely unequal a distribution of
consumption. This is why the hand intervening to restrain the consumption of the rich serves
to maintain the stability of the market system.
A long line of interpreters have seen the hand of Theory of Moral Sentiments as divine. My
interpretation is that it is special providence, balancing the general providential force of self
interest in markets. It must be said though that the line between special and general
providence here is a fine one, as it would seem the hand acting to restrain the rich acts fairly
regularly, notwithstanding the eating habits of the rich in Smith’s day.
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(iii) Wealth of Nations
The third and most quoted invisible hand passage is in the Wealth of Nations IV ii (Smith
1776 p456). It is part of a chapter on restraints on foreign trade where Smith describes the
consequences of merchants seeking the greatest return on their capital. The individual
merchant weighs the greater security of investing in domestic industry against the possibility
of greater profits abroad, and is led by an invisible hand to invest domestically.
The text is “By preferring the support of domestic 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
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” (p456). Smith
comments “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 to be
done by those who affected to trade for the public good” (p456) before returning to the
theme of domestic verses foreign industry.
The dominant interpretation of this passage is that it expresses Smith’s theory of the market
transforming self interest into unintended benefits for all. On this interpretation the
invisible hand is a metaphor for the market or price mechanism or competition or something
similar.
However there are a number of problems with such an interpretation, as pointed out in
William Grampp’s (2000) detailed analysis of the invisible hand passage in the Wealth of
Nations.
1) This is not what the passage actually says. Nothing is said in the passage about the price
mechanism or competition or any of the other things the hand supposedly stands for. It is
true that it is mentioned that the outcomes produced by the hand are unintended, but this
does not narrow the field of possible interpretations much. In my view most of the
popularity of this interpretation comes from illegitimately reading into the hand Smith’s
arguments about markets elsewhere in the Wealth of Nations.
2) There is no mention of the hand in the earlier sections of the Wealth of Nations that
discuss markets, competition and the price mechanism. If the hand is part of his argument
about markets why does he only use it once, wait several hundred pages, and bury it in a
passage about foreign trade?
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3) Too much weight has been put on this phrase, “in this, as in many other cases” in making
the hand into a general law. Smith simply suggests there are other cases, not that the hand is
universal.
4) Too much weight has also been put on the “as if” qualification of the invisible hand that
isn’t in the passage. The action is actually by a hand, not some diffuse process.
On the basis of these and other objections to the dominant interpretations, Grampp (2000)
seeks another that is truer to the context. For him the invisible hand in the Wealth of Nations
is “simply the inducement a merchant has to keep his capital at home, thereby increasing the
domestic capital stock and enhancing military power” (p441).
I agree with Grampp that the invisible hand keeps capital at home, reinforcing the desire of
the merchant for secure returns and against the desire for larger profits abroad. I would add
though that this action of the hand is special providence, working against the general
providential force of profit seeking.
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6) A PLAUSIBLE INTERPRETATION?
I am interpreting the invisible hand as the special providential hand of God, which works to
maintain the stability of the system, for instance by restraining inequality and keeping capital
at home. This interpretation has a number of attractions.
Firstly, it gives due weight to providential aspects of Smith’s work identified by many
scholars, adding a decisive distinction between special and general providence. Such a
distinction is well grounded in Smith’s philosophical and theological context.
Secondly, it explains where Smith’s hand language comes from – Newton’s discussions of
God moving parts of the universe as parts of a body. There is a strong link between Smith
and Newton, and significantly Smith’s first use of the hand image is a work which discusses
Newton’s scientific approach. A source in Newton seems more plausible than Rothschild’s
suggestion that it echoes Macbeth’s “bloody invisible hand”.
Thirdly, it fits each of the three invisible hand passages. Some of the other proposals, such
as Grampp’s, fit only one of the passages and create considerable interpretative problems for
the other passages. These interpretive problems can only be avoided by the implausible
suggestion that Smith’s three references to the invisible hand are unrelated.
Fourth, it gives a plausible development of the idea over time in Smith. There is no need for
a puzzling reversal of the meaning of the image, as suggested by Macfie (1971 p595). In
each of the three passages the divine hand is acts irregularly to maintain the stability of the
system. As we move through the three passages the description of the action of the hand
becomes clearer, though it must be conceded that even in the Wealth of Nations discussion of
merchants balancing security and profits nothing as detailed as the Newtonian description of
the mechanism of comets shifting matter around the universe.
Fifth, this interpretation makes sense of lack of prominence of invisible hand in Smith’s
writings. If the hand represents irregular special providential action, then we would not
expect it to be popping up everywhere in Smith’s works.
Sixth, it deals with the ironic, almost joking tone which Rothschild sees in the passages.
This tone expresses Smith’s ambivalence about special providence; Divine intervention to
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maintain the stability of the system is for Smith a wistfully expressed hope, rather than a
certainty. Such a tone is appropriate as special providence is by definition unpredictable.
7) CONCLUSIONS
The meaning of the invisible hand in Smith is an interesting intellectual puzzle worth
resolving. I hope that the interpretation offered here will be seriously considered, and even
if found to be in need of modification, it will encourage further study of the theological
context of Smith’s work. Some obvious areas for future investigation are Smith’s theodicy,
the relationship of his approach to human ignorance and folly to the Calvinist tradition, and
the role of the future life in his system.
Unlike many other interpretative puzzles, the meaning of the invisible hand matters greatly
for arguments about free markets. It must be one of the most used yet least understood
phrases in contemporary public policy discussion. A benefit of the interpretation offered
here is that it detaches the general providential case for markets from the special providential
invisible hand. The case for markets can then be evaluated on its economic and theological
merits without debates about markets being short-circuited by friends or foes invoking dodgy
versions of the invisible hand. On the interpretation offered here Smith’s invisible hand is
only needed because of the market does not have the capacity to create the conditions for its
own stability. It matters that the hand does not matter as much as we might have thought
to the case for free markets.
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Article
Adam Smith’s discourses aim to encourage mores, practices, and public policies in service to the common good, or that which a universally benevolent spectator would approve of. The Wealth of Nations illustrates how in pursuing our own happiness within the bounds of prudence and commutative justice, we may be said, literally or metaphorically, to cooperate with God in furthering the happiness of humankind. The Theory of Moral Sentiments elaborates an ethic, here called “focalism,” that instructs us to proportion our beneficent efforts to our knowledge and ability. The relationship between political economy and focalism is bidirectionally reinforcing. In one direction, the ethic of focalism contributes to the moral authorization of self-love, thereby invigorating and dignifying honest commercial activities. In the other direction, the insights of political economy reinforce the ethic of focalism by elaborating how through prudent commerce and focal beneficence, we cooperate, even if only metaphorically, in a grand social enterprise.
Article
In the eighteenth-century Scottish and British cultural context, idleness was a central issue for religion, literature, art, and philosophy. This paper analyzes the reflections of David Hume and Adam Smith on idleness and commercial society. Hume advanced his most provocative view on the subject in his Dialogues Concerning Natural Religion (1779), where idleness is represented as the endowment made by the “very sparing hand” of the “author of nature” to humanity. My argument is that Smith’s view on idleness that was advanced in the Wealth of Nations (1776) is connected to Hume’s Dialogues , as Smith’s invisible hand defeats idleness through a combination of self-interest, the propensity to exchange, and the division of labor. The broader aim of this study is to add to the philosophical relationship between the Scottish philosophers.
Chapter
Economists, philosophers and historians of economic thought have suggested many alternative interpretations of Smith’s invisible hand. The idea put forward in this chapter is that the invisible hand was a tool which helped to formulate in nondefinitional terms the conception that the order of society is (1) endogenous, beneficial, and exhibits self-organizing properties, (2) the result of movements and choices of independent individuals.
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This paper aims to resolve a seeming paradox in Adam Smith’s study of history with regard to inference to the best explanation. In the Wealth of Nations Smith argued the priority of “natural progress” over the model of historical progress as evidenced by many contemporary historians. These two competing exercises in philosophical history raise the previously unexplored question of what are critical tests to justify which model is the best, with Smith’s wide use of scientific realist standards such as seeking for underlying general causality, generality in explanatory and predictive power, and appeal to the arts of persuasion.
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This chapter shows how our contemporary concept of 'market' is derived from a particular nineteenth-century theological concern with the possibility of empirical insight into human society.
Article
The so-called ‘new view’ of Adam Smith that emphasizes his religious context is one of many attempts by historians of economics and other intellectual historians to rescue Smith from various causes into which he has been recruited. This paper discuses the ‘new view’, including why and when it arose, and some of its antecedents. The ‘new view’ is actually a very old view, and the most common reading of Smith’s work in the late eighteenth and early nineteenth centuries. The paper then responds to Colin Heydt’s recent attempt to rebut the new view, concluding his target is ill-defined and largely misunderstood, and his arguments are weak.
Article
In contemporary thought, the terms “secular” and “religious” are polar opposites. They are held to occupy separate domains. But that view is mistaken. Religious belief organizes society around fundamental ideas about ethics and existence. This article examines the way economic belief systems function as religions. Economic thought in various forms (Marxist, Keynesian, neoclassical) is brimming with implicit religious meaning. Instead of belief in an afterlife and heaven, modern economics promises heaven on earth in the form of continuous material progress. Adherents of competing economic ideologies often promote them with the energy of religious zealots. Thus, modern societies are still organized around religious principles, but they are now hidden from sight. This article shows how the religious dimension of the modern worship of economic progress is rooted in Christian theology: Calvinism in the United States and Lutheranism in the Nordic countries, which are famous for their own brand of social democracy. In recent decades, secular faith in the religion of economic progress has begun to falter. The failures of mainstream economics to warn of impending crisis has reduced its credibility, even among economists. More importantly, the rise of environmentalism as a religion has vastly increased the number of citizens who question the goal of material progress. The attack on economic religion may have also undermined the credibility of mainstream political parties, partially explaining Brexit in England and the election of Donald Trump in the United States.
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It has been claimed that Adam Smith, like David Hume, has a ‘reflective endorsement’ account of the authority of morality. On such a view, our moral faculties and notions are justified insofar as they pass reflective scrutiny. But Smith’s moral philosophy, unlike Hume’s, is also peppered with references to God, to divine law, and to our being ‘set up’ in a specific way so as to best attain what is good and useful for us. This language suggests that there is another strategy available for accounting for the authority of morality, one that would align Smith with teleological accounts of human nature and theological accounts of morality. The authority of Smith’s impartial spectator would, on such an account, be derivative – it would be derived from the supreme authority of God. Such a view poses a serious challenge for contemporary interpreters of Smith who seek to read him as an empiricist, naturalist, and sentimentalist moral philosopher. This paper examines the textual evidence for this view, focusing on the role of the explicitly religious language found in a key section of Smith’s Theory of Moral Sentiments. I argue that this language should neither be interpreted as merely ornamental, nor as providing a theological justification of morality. Rather, it is part of Smith’s illustration of the psychological influence of religious beliefs, especially the beliefs in an all-seeing judge and in a just afterlife where all human actions will be accounted for and appropriately rewarded or punished.
Chapter
‘The invisible hand’ was a metaphor used by Adam Smith to describe the principle by which a beneficient social order emerged as the unintended consequences of individual human actions. Although Smith used the specific term ‘invisible hand’ in this sense only twice in his writings, once in the Theory of Moral Sentiments and once in The Wealth of Nations, the idea the metaphor connotes permeates all of his social and moral theories. Indeed, it was the notion of the invisible hand that enabled Smith to develop the first comprehensive theory of the economy as an interrelated social system. It is not much of an exaggeration to say that the invisible hand made theoretical social science itself possible.
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“Political economy” and Christian theology coexisted happily in the intellectual world of eighteenth-century Britain. During the nineteenth century they came to be seen as incompatible, even mutually hostile. In the twentieth century they went their separate ways and are no longer on speaking terms. These essays are snapshots of the history of this estrangement.
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Ever since the time of Aristotle, the natural sciences and medicine have furnished analogies for studies of governments, classifications of constitutions, and analyses of society.* One of the fruits of the Scientific Revolution was the vision of a social science — a science of government, of individual behavior, and of society — that would take its place among the triumphant sciences, producing its own Newtons and Harveys. The goal was not only to achieve a science with the same foundations of certain knowledge as physics and biology; there was thought to be a commonality of method that would advance the social sciences in the way that had worked so well in the physical and biological sciences. Any such social science, it was assumed, would be based on experiments and critical observations, would become quantitative, and would eventually take the highest form known to the sciences — expression in a sequence of mathematical equations.
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Introduction: To a modern readership the leading, and most provocative, figure writing in the philosophy of religion in eighteenth-century Scotland was David Hume. To Scots contemporaries too he was no doubt the most provocative, but he was far from leading. They sought to minimise his impact and played down his significance, and in the short term they succeeded. This was less because they had other major players than because the main traditions of thought ranged against Hume could count on enough broad support within their respective spheres to counteract a challenge that was not seen at the time particularly to tax their wits. If posterity has been less sure that they were entitled to be so complacent, it is important to be clear where the strength of opinion at the time actually lay. Accordingly, this chapter falls into three parts. The first explores the state of the subject before Hume wrote, distinguishing between an orthodox tradition for which theology was the primary science that could dictate terms of reference to philosophy, and a new, largely imported (English and Dutch), tradition of 'rational' religion that subjected the whole framework of religious belief to the same rational critique as other forms of knowledge and belief. Within the universities, this was part of a recognised adjustment of interests between divinity and arts faculties, but outside academia it generated bitter conflicts between conservative and progressive parties in the Kirk.
Article
Adam Smith was a philosopher before he ever wrote about economics, yet until now there has never been a philosophical commentary on the Wealth of Nations. Samuel Fleischacker suggests that Smith's vastly influential treatise on economics can be better understood if placed in the light of his epistemology, philosophy of science, and moral theory. He lays out the relevance of these aspects of Smith's thought to specific themes in the Wealth of Nations, arguing, among other things, that Smith regards social science as an extension of common sense rather than as a discipline to be approached mathematically, that he has moral as well as pragmatic reasons for approving of capitalism, and that he has an unusually strong belief in human equality that leads him to anticipate, if not quite endorse, the modern doctrine of distributive justice. Fleischacker also places Smith's views in relation to the work of his contemporaries, especially his teacher Francis Hutcheson and friend David Hume, and draws out consequences of Smith's thought for present-day political and philosophical debates. The Companion is divided into five general sections, which can be read independently of one another. It contains an index that points to commentary on specific passages in Wealth of Nations. Written in an approachable style befitting Smith's own clear yet finely honed rhetoric, it is intended for professional philosophers and political economists as well as those coming to Smith for the first time.
Article
Part I Positive economics - the impartial spectator jurisprudence and the theory of natural price: Adam Smith, moral philosophy and science the theory of moral sentiments and political economy the impartial spectator and natural price - markets as a social phenomena natural jurisprudence and the theory of value. Part II Normative economics - natural liberty, justice and the common good: natural price and commutative jsutice -Adam Smith and the just price traditions (with Barry Gordon) distributive jsutice (with Barry Gordon).