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Adam Smith’s “Invisible Hand”

Adam Smith’s “Invisible Hand”

| November 27, 2018


Being still suffused with gratitude for all the bounty that is available to us, not just last week, but every day, I want to share a post by Mark Perry on his Carpe Diem blog.  As he often does, he bases his post around articles or columns by other commentators.  Today, I will steal a page from his playbook, by doing the same.  From his post on November 20, titled:  Giving thanks for the magic of the marketplace, the invisible hand of strangers, and no turkey czars :

   “In a 2003 Boston Globe article titled “Giving Thanks for the Invisible Hand,” syndicated columnist Jeff Jacoby offered a wonderful tribute to the miracle of the invisible hand that makes affordable turkeys available so efficiently every year at Thanksgiving through the power of “spontaneous order” and without the need for any central planning or “turkey czars”:

   Isn’t there something wondrous — something almost inexplicable — in the way your Thanksgiving weekend is made possible by the skill and labor of vast numbers of total strangers?

   To bring that turkey to the dining room table required the efforts of thousands of people — the poultry farmers who raised the birds, of course, but also the feed distributors who supplied their nourishment and the truckers who brought it to the farm, not to mention the architect who designed the hatchery, the workmen who built it, and the technicians who keep it running. The bird had to be slaughtered and defeathered and inspected and transported and unloaded and wrapped and priced and displayed. The people who accomplished those tasks were supported in turn by armies of other people accomplishing other tasks — from refining the gasoline that fueled the trucks to manufacturing the plastic in which the meat was packaged.

   The activities of countless far-flung men and women over the course of many months had to be intricately choreographed and precisely timed, so that when you showed up to buy a fresh Thanksgiving turkey, there would be one — or more likely, a few dozen — waiting. The level of coordination that was required to pull it off is mind-boggling. But what is even more mind-boggling is this: No one coordinated it.

   No turkey czar sat in a command post somewhere, consulting a master plan and issuing orders. No one forced people to cooperate for your benefit. And yet they did cooperate. When you arrived at the supermarket, your turkey was there. You didn’t have to do anything but show up to buy it. If that isn’t a miracle, what should we call it?

   Adam Smith called it “the invisible hand” — the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many. Out of the seeming chaos of millions of uncoordinated private transactions emerges the spontaneous order of the market. Free human beings freely interact, and the result is an array of goods and services more immense than the human mind can comprehend. No dictator, no bureaucracy, no supercomputer plans it in advance. Indeed, the more an economy is planned, the more it is plagued by shortages, dislocation, and failure.

   It is commonplace to speak of seeing God’s signature in the intricacy of a spider’s web or the animation of a beehive. But they pale in comparison to the kaleidoscopic energy and productivity of the free market. If it is a blessing from Heaven when seeds are transformed into grain, how much more of a blessing is it when our private, voluntary exchanges are transformed – without our ever intending it – into prosperity, innovation, and growth?”

Mr. Perry summarizes with the following:

   “Bottom Line: As you celebrate Thanksgiving on Thursday with your family and friends, remember to express some thanks and gratitude to the thousands of “invisible” strangers who won’t be there in person, but who were led by the “invisible hand” of the market over the last several months to become your “market benefactors” and make sure your affordable holiday feast was possible once again.

   I’ll end the post with a great, related quote from President Ronald Reagan, who said in 1981:

   The societies that have achieved the most spectacular, broad-based progress are neither the most tightly controlled, nor the biggest in size, nor the wealthiest in natural resources. No, what unites them all is their willingness to believe in the magic of the marketplace.”

On November 25, Mr. Perry returned to Adam Smith’s “Invisible Hand” with a post about A.J. Jacobs’ gratitude journey.  Mr. Jacobs, after prompting from his son, actually set out “trotting around the globe” to personally thank some of the invisible hands that were responsible for providing his morning cup of coffee.  Not a turkey, a simple cup of coffee.  Being a writer, he wrote a book about it:  Giving thanks: A.J. Jacobs on his gratitude journey.   

If you click on the link to the post, you can view a video from the November 25 CBS Sunday Morning program, where Mr. Jacobs discovers his “inner Adam Smith”.  Here is the link to the entire post: Giving thanks for a cup of coffee and the invisible hands that make it possible.

Until next time, cheers!