Adam Smith and the Invisible Hand

[vastin]

I've been reading up on Adam Smith a bit lately. Love most of his writing and agree with much of it. It's a pity how much of his thought is discarded or ignored by current conservative economists. He's actually a fairly balanced economist - definitely NOT a supply-sider...

But this one bit here I do have some issue with, because it simply doesn't

Comments

[darkwhimsy]

Well, there are places where Adam Smith failed to grasp some of the complications that later generations got into. That being said, I believe his argument here is not so much that "no one starves" - obviously untrue - but rather "no one starves because someone else is eating all the food".

I'd almost bold his word "necessaries" there, as in "They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made".

Now, I think the point is still a rather weak one - yes, the demand part of supply + demand means that a starving man tries extra-hard to get the food he needs, but that still doesn't get us that close to a perfect distribution. But I think that's kind of where he's going in this passage, as an attempt to say "it works surprisingly well, considering the vast wealth disparity".

[vastin]

I'm looking at periods in history where it has worked 'surprisingly well' in terms of distribution and I'm not finding a ton of them - those I have found generally coincide with a [i]moderate[/i] level of government oversight and management of capital economies.

They certainly don't seem to occur under either laissez-faire oversight (which generally coincides with periods of stark wealth concentration, as in the US today), or rigid socialist controls (which generally inhibit economic growth as a whole).