A very nice short piece, kudos. Two thoughts. First, it's not clear to me that the invisible hand suggests equilibrium at all. Indeed, the hand might keep pushing, which would suggest disruption. While Smith doesn't seem very interested in innovation, the effort to find what the finance bros call "edge" should change the terms of competition fairly regularly, creative destruction and all that. My sense is that the desire to see equilibrium in competition is essentially a form of political apology.
Second, your generous effort to rescue Smith's thinking as science relies on a VERY capacious idea of what might count as science, I think a far more capacious conception that Smith himself, or any of his (pseudo?) rationalist descendants would countenance. I don't mean that it's wrong (well, it is wrong, in its way, but vital nonetheless) -- but you've essentially argued that Smith is a world builder, and the world he built, which we can think, has some passing if not tight resemblance to our own world, which we cannot think well at all. "Science"? I'd say natural philosophy, with Smith telling a state of nature story, a heuristic.
Anyway, this just off the cuff. Bravo and keep up the good work.
Thank you David - I think the naturphilosophie point is probably right - apart from anything Thom was an eccentric, and always accused of carelessly mixing philosophy and science
This provokes me to wonder how much of Smith's view of economics was derivative of Christian ecclesiology (where the Holy Spirit is the "invisible hand" forming a body out of its various parts, etc.).
The repetition that GE theory "rigorously proved" Smith's invisible hand is repeated ad nauseam. It sets up for the equally disastrous conjecture that since the assumptions don't hold in the real world Smith was himself wrong.
Nice short piece on a key element of Adam Smith's Wealth of Nations, here!
When I read The Wealth of Nations I was struck by the fluid mechanical nature of Smith’s material analogies - the places he describes different channels for money and goods to flow like those channels really are canals with flow rates and flow height levels.
This connects to what was an extremely important part of Newton’s legacy in British science, for instance in “Newtonian medicine” which focused on the hydraulics of blood above all, though this hydraulic Newtonianism became unfashionable and is not so well remembered today as Newton's gravitational theory (and I Bernard Cohen made an interesting case that for American science, it was the Opticks that really inspired Ben Franklin and his peers, not gravity or hydraulics: there were several separate Newtonian traditions).
Therefore when I read the Wealth of Nations it was striking to me how much Smith's model was a *steady state hydraulic flow* model rather than an equilibrium model, which is in a way far ahead of its time since modern thermodynamics has only recently been recognizing the deep formal similarities of the mathematics of stochastic equilibria and stochastic steady states through work like Crooks‘s and Jarzynski’s. The principle of locality of fluid mechanics (no fluid particle of a river “knows it is flowing to the ocean” yet it flows there nonetheless through its local laws of motion) is a clear scientific analog to Smith's principle of economic locality here, well-highlighted in Nik's article.
A very nice short piece, kudos. Two thoughts. First, it's not clear to me that the invisible hand suggests equilibrium at all. Indeed, the hand might keep pushing, which would suggest disruption. While Smith doesn't seem very interested in innovation, the effort to find what the finance bros call "edge" should change the terms of competition fairly regularly, creative destruction and all that. My sense is that the desire to see equilibrium in competition is essentially a form of political apology.
Second, your generous effort to rescue Smith's thinking as science relies on a VERY capacious idea of what might count as science, I think a far more capacious conception that Smith himself, or any of his (pseudo?) rationalist descendants would countenance. I don't mean that it's wrong (well, it is wrong, in its way, but vital nonetheless) -- but you've essentially argued that Smith is a world builder, and the world he built, which we can think, has some passing if not tight resemblance to our own world, which we cannot think well at all. "Science"? I'd say natural philosophy, with Smith telling a state of nature story, a heuristic.
Anyway, this just off the cuff. Bravo and keep up the good work.
Thank you David - I think the naturphilosophie point is probably right - apart from anything Thom was an eccentric, and always accused of carelessly mixing philosophy and science
This provokes me to wonder how much of Smith's view of economics was derivative of Christian ecclesiology (where the Holy Spirit is the "invisible hand" forming a body out of its various parts, etc.).
Jacob Viner wrote a great book about it - The Role of Providence in the Social Order: An Essay in Intellectual History
The repetition that GE theory "rigorously proved" Smith's invisible hand is repeated ad nauseam. It sets up for the equally disastrous conjecture that since the assumptions don't hold in the real world Smith was himself wrong.
yes agreed - I think the Hutchison in the footnotes gives the whole idea, so flippantly pronounced by Tobin, a good drubbing
The romans were rich, they did not have computers, Bloomberg terminals, or even fancy calculators.
Nice short piece on a key element of Adam Smith's Wealth of Nations, here!
When I read The Wealth of Nations I was struck by the fluid mechanical nature of Smith’s material analogies - the places he describes different channels for money and goods to flow like those channels really are canals with flow rates and flow height levels.
This connects to what was an extremely important part of Newton’s legacy in British science, for instance in “Newtonian medicine” which focused on the hydraulics of blood above all, though this hydraulic Newtonianism became unfashionable and is not so well remembered today as Newton's gravitational theory (and I Bernard Cohen made an interesting case that for American science, it was the Opticks that really inspired Ben Franklin and his peers, not gravity or hydraulics: there were several separate Newtonian traditions).
Therefore when I read the Wealth of Nations it was striking to me how much Smith's model was a *steady state hydraulic flow* model rather than an equilibrium model, which is in a way far ahead of its time since modern thermodynamics has only recently been recognizing the deep formal similarities of the mathematics of stochastic equilibria and stochastic steady states through work like Crooks‘s and Jarzynski’s. The principle of locality of fluid mechanics (no fluid particle of a river “knows it is flowing to the ocean” yet it flows there nonetheless through its local laws of motion) is a clear scientific analog to Smith's principle of economic locality here, well-highlighted in Nik's article.