Invisible Hand Arguments: Milton Friedman and Adam Smith

2007 ◽  
Vol 5 (2) ◽  
pp. 103-117 ◽  
Author(s):  
Alistair M. Macleod
Keyword(s):  
Public Interest ◽  
Adam Smith ◽  
Invisible Hand ◽  
Moral Sentiments ◽  
The Public ◽  
Economic Motivation ◽  
Milton Friedman ◽  
Common Structure ◽  
Wealth Of Nations ◽  
The Invisible

The version of the invisible hand argument in Adam Smith's Theory of Moral Sentiments differs in important respects from the version in The Wealth of Nations. Both are different, in turn, from the version invoked by Milton Friedman in Free to Choose. However, all three have a common structure. Attention to this structure can help sharpen our sense of their essential thrust by highlighting the questions (about the nature of economic motivation, the structure of markets, and conceptions of the public interest) to which answers of certain kinds would have to be available for any of the versions to succeed.

The Proper Context of Business

2019 ◽  
pp. 31-66
Author(s):  
James R. Otteson
Keyword(s):  
Political Economy ◽  
Empirical Evidence ◽  
Local Knowledge ◽  
Adam Smith ◽  
Social Institutions ◽  
Invisible Hand ◽  
Moral Sentiments ◽  
Wealth Of Nations ◽  
Political Economic ◽  
Proper Context

Chapter 2 investigates the explanation Adam Smith gave in his famous Wealth of Nations (1776) for why some places are wealthier than others, and what political, economic, and other social institutions are required for increasing prosperity. The chapter discusses the conception of “justice,” as opposed to “beneficence,” that Smith offered The Theory of Moral Sentiments (1759), as well as Smith’s economizer, local knowledge, and invisible hand arguments from his Wealth of Nations that form the basis of his political economy. We look at the duties of government implied by Smithian political economy, including both what he argues government should do and what it should not do. We also look at empirical evidence to answer the question of whether Smith’s predictions on behalf of his recommendations have come true in the intervening centuries.

Adam Smith on the Philosophy and Provision of Education

2017 ◽  
Vol 30 (1) ◽  
pp. 105-116 ◽  
Author(s):  
Alex M. Thomas
Keyword(s):  
Adam Smith ◽  
Social Process ◽  
Division Of Labour ◽  
Education For All ◽  
Public Provision ◽  
Moral Sentiments ◽  
The Public ◽  
Parents And Children ◽  
Wealth Of Nations

This article examines the views of Adam Smith on the philosophy and provision of education. On the basis of his Theory of Moral Sentiments and other writings, it becomes clear that Smith views education, conceived broadly to include both the learning of ‘wisdom’ and ‘moral sentiments’, as central to a prosperous or flourishing society. Education, in Smith’s view, is not restricted to formal institutions of education but also includes social learning—that between parents and children, and the learning arising from friendships. For Smith, education is a social process. Smith also discusses the important role of wonder and surprise in the process of education. The provision of education, as outlined in his Wealth of Nations, largely supports the public provision of education with partial contributions from the enrolled students. Smith favoured education for all because he believed that it would offset the harmful effects of division of labour on the workers, and therefore, education had to be accessible to the workers. The essay concludes by reiterating Smith’s position that education for all is necessary to create a prosperous society. JEL: A20, B12, B31

Ethics In Business: What Managers Practice That Economists Ignore

1992 ◽  
Vol 2 (3) ◽  
pp. 305-315 ◽  
Author(s):  
James W. Kuhn
Keyword(s):  
Adam Smith ◽  
Market Behavior ◽  
Moral Sentiments ◽  
Milton Friedman ◽  
Wealth Of Nations ◽  
Theory Of Moral Sentiments

In The Theory of Moral Sentiments, the book preceding The Wealth of Nations, Adam Smith argued for a kind of virtue that Milton Friedman and many another economist reject as appropriate market behavior:

Adam Smith on Impartial Patriotism

2021 ◽  
pp. 1-22
Author(s):  
Yiftah Elazar
Keyword(s):  
Division Of Labor ◽  
Public Interest ◽  
Adam Smith ◽  
Invisible Hand ◽  
Close Attention ◽  
Potential Value ◽  
The Invisible

Abstract Scholars have emphasized Adam Smith's critique of the dangers of patriotism, but have not paid close attention to its potential value. This article recovers from Smith's work an attractive model of patriotism without nationalism. The potential value of patriotism lies in inspiring individuals to realize an ideal of impartial beneficence, which consists in overcoming selfishness and other subpolity partialities and in promoting the greater happiness of all fellow citizens. Smith defends virtuous patriotism against strong cosmopolitanism by arguing that a global division of labor, which directs individuals to benefit their compatriots, more effectively serves the interests of humanity than directly trying to promote global happiness. This article illuminates aspects of Smith's work that contrast with the “invisible hand” argument and favor the conscious pursuit of public interest in some contexts. It contributes to recent discussions of patriotism a distinctive way of understanding its relation to impartiality.

scholarly journals Adam Smith, The Wealth of Nations, and the “Invisible Hand”: A Metaphor For Ambiguity-Uncertainty Aversion by Decision Makers

2016 ◽  
Vol 3 (5) ◽  
pp. 97 ◽  
Author(s):  
Michael Emmett Brady
Keyword(s):  
Decision Theory ◽  
Adam Smith ◽  
Complete Information ◽  
Invisible Hand ◽  
Uncertainty Aversion ◽  
Probability Calculus ◽  
Probability Estimates ◽  
Wealth Of Nations ◽  
The Invisible

<p><em>Smith’s use of the “Invisible Hand”, as pointed out by Gavin Kennedy, is a metaphor provided for the great percentage of readers of the Wealth of Nations whom Smith realized would not be able to grasp the nature of his argument ,which was about the ambiguity-uncertainty aversion of the majority of 18th century English business men. Gavin Kennedy has pointed out that the term,” Invisible Hand”, had nothing to do with Laissez Faire, free markets ,free trade, Natural liberty, etc. ,for Adam Smith. Smith’s argument is an application of his very advanced decision theory that regarded the standard mathematical laws of the probability calculus as a special case that had only limited applicability in the real world. In general, applications of the mathematical laws of the probability calculus required a complete information set that was rarely satisfied. Smith realized that probability ,nevertheless ,had to be taken into account. Smith advocated an interval valued approach to the use of probability under conditions of uncertainty/ambiguity.</em></p><p><em></em><br /><em>Smith made great use of the concept of uncertainty in the Wealth of Nations. Uncertainty for Smith dealt with the quality of the information base upon which the probabilities were being calculated. Smith generally defined risk in the Wealth of Nations as an inexact and/or indeterminate estimate not based on the mathematical laws of the probability calculus. Risk could be calculated exactly only in conditions where there was a very high quality of evidence over which there were no conflicts and/or disputes of assessment regarding the relevancy of the data.</em></p><p><em></em><br /><em>Smith’s major conclusion in Part IV of the Wealth of Nations is that businessmen are ambiguity and/or uncertainty averse. The quality of the information ,data ,or knowledge upon which the probabilities, which would be interval estimates, is a second factor that is completely independent of the probability estimates themselves. Only in the limiting case ,where the evidence is great , stable, and invariant over time, as in the case of deciding to become a shoemaker, would the probability estimates be point estimates.</em></p><p><em></em><br /><em>Smith completely rejects the ethics and decision theory of Jeremy Bentham, as well as all approaches built on it, such as the Subjectivist ( SEU-Subjective Expected Utility) approaches of Frank Ramsey, Bruno de Finetti, L J Savage , Milton Friedman .and modern Bayesians, such as Patrick Suppes, because these approaches require the decision maker to be able to specify precise, exact numerical probabilities. The specification of such exact probabilities means that there is no uncertainty about the future.</em></p>

scholarly journals Adam Smith e a virtude da justiça

2019 ◽  
Vol 64 (1) ◽  
pp. 31597
Author(s):  
Denis Coitinho
Keyword(s):  
Adam Smith ◽  
Invisible Hand ◽  
Moral Sentiments ◽  
Wealth Of Nations ◽  
Theory Of Moral Sentiments

O objetivo central desse artigo é refletir sobre o papel e o significado do critério de justiça no pensamento de Adam Smith, considerando especialmente a obra The Theory of Moral Sentiments e, parcialmente, as obras Lectures on Jurisprudence e An Inquiry into the Nature and Causes of the Wealth of Nations. O propósito básico é tentar esboçar uma teoria da justiça que pode ser encontrada nas obras de Smith, particularmente no seu texto de 1759, a saber, The Theory of Moral Sentiments. Para tal, inicio esclarecendo alguns conceitos centrais de sua teoria moral sentimentalista, a saber, empatia (sympathy), espectador imparcial (impartial espectator) e mão invisível (invisible hand). Posteriormente, investigo o papel das virtudes nesta teoria normativa anti-utilitarista e a distinção entre virtudes positivas e negativas. De posse disso, o próximo passo será analisar a concepção de justiça retributiva defendida por Smith, que parece defender uma teoria híbrida da punição por englobar aspectos retributivista, preventivista, expressivista e reabilitacionista. Por fim, reflito sobre o significado da justiça como virtude negativa e sua ligação com os direitos.

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