Occasionally I climb onto a soap box and get preachy. One of the topics near and dear to me involves 'The invisible hand' mentioned briefly by Adam Smith in one of the editions of 'The Wealth of Nations.' There is a commonly held, but uneducated interpretation of this term that I think must be fought. Occasionally I do and this is one of those rants I've lifted from blog comments to a full post here.
[There are many other topics to get preachy about, but this one gets to me.]
_____________
The invisible hand doesn't solve all problems. People who believe that haven't read Adam Smith (or Hayek's longer-winded version) enough to get the point being made.
The Invisible Hand isn't some beneficent Hand of God or anything like that. It is simply an observation that market forces occasionally steer our selfish impulses in virtuous directions. I use the term 'virtue' because Smith was employed as a philosopher. His subject area centered on 'virtue ethics'. His 'Theory of Moral Sentiments (TMS)' book considered why people do what they do from a virtue ethics perspective. TMS examined a few things, but left out much of the discussion associated with Prudence. 'Wealth of Nations' focused strictly on Prudence and that's where the invisible hand gets mentioned. Barely mentioned.
(The book at never got published focused on Justice. Smith really WAS a moral philosopher.)
Hayek's extension observes that knowledge for 'what is' and 'what can be done' is inherently distributed. There is NO WAY it can be centralized sufficiently to enable a 'planner' to optimize fully. What works best is decentralized optimization where knowledge gets applied at the point and time it is available. That requires a market structure. That does NOT mean all problems will get solved. That does NOT mean the best outcomes will occur. It DOES mean that most of the knowledge available to us will get used as best as can be imagined by those using it.
It's that 'as best as can be imagined' thing that should catch our attention most. That's why we liberate our neighbors… even the smelly ones. That's why we dignify their choices… even the failures. That's why we educate everyone… even the leeches.
Popper's extension on this shows you'd need far more than a super computer to centralize knowledge for a planner. You'd need a time machine and the history of the universe. All of it. The universe is inherently open in the sense of indeterminism. No central planner can exist within it. Ever.
_____________
My beef with the naive interpretation of Invisible Hand is that it is a faith/religious position. We imagine God existing and guiding us and then assume too much of His involvement in what we do. When someone says "There is a purpose in everything" I actually cringe. That attitude enables some of the worst evil I can imagine. The kind of evil that occurs when we choose not to oppose evil.
No comments:
Post a Comment