Saturday, August 13, 2011

Adam Smith's Invisible Hand & Economic Man

[Economic Man] became famous through Adam Smith.  [Economic Man] was an optimistic image... as of its assumption of a pre-established harmony in nature as a whole.  Man might be motivated primarily by egoism or self-interest - Smith assumed this to be the case - but this very self-interest worked automatically to produce an identity of interests, or the general good.
[Adam Smith became concerned] with the public, the economic, world, where he observed individuals intent on their own gain, and hardly ever "intending" the good of others.  But the remarkable thing was that nature had so contrived things that despite intentions to the contrary, individuals "necessarily" labored for the public interest, that is, by increasing society's annual revenue to its utmost capacity.  This was the doctrine of natural or pre-established harmony.  The harmony obviously did not depend on human contrivance or reason.  The general wealth derived from the division of labor...  Intending only his own gain, the individual was "led by an invisible hand" to promote ends that were more general and beneficial.  Smith shared the notion of a natural harmony: "self-interest" turned into "public benefit" automatically.  In other words, though human nature in general might not be especially admirable, it yet might contribute, or rather be made to contribute, to a beneficial social result.

-excerpt from Franklin Baumer's Modern European Thought