This chapter discusses Adam Smith’s rhetorical use of the ‘invisible hand’ in the context of his teachings on metaphors as figures of speech in his lectures on Rhetoric (Edinburgh, 1748-51; Glasgow, 1752-64 (LRBL). After Smith died (1790), a strikingly long-period of silence about his three references to an ‘invisible hand’ followed until 1875, when traces emerged of a Cambridge University oral tradition of debate about ‘Laissez-faire’ and the ‘invisible hand’ that were closer to its modern, ‘selfish’ versions than those used by Adam Smith. That oral tradition eventually leached into print (Pigou, 1922; Gray, 1931). Paul Samuelson (1948), transmuted Smith’s ‘self-interest’ into ‘selfishness’, which flooded across the discipline from the 1960s.
Much of modern analysis of the ‘invisible hand’ remains tenuously connected to Adam Smith’s more modest rhetorical purposes (Nozick, 1974; Grampp, 2000; Petsoulas, 2001; Aydinonat, 2008; Klein, 2009, and Tieffenbach, 2011). Few recent references are close to Adam Smith’s intentions, except, notably and exceptionally, Emma Rothschild (2001) on Smith’s ‘ironic joke’. Moreover, after 1875, intermittent references continued until the 1940s, when the trickle became a flood.
This chapter does not take sides on ideological debates about the merits of free-markets versus government interventions. Its focus is on the variance between Smith’s ideas and modern attributions of them in philosophical ideas and policies widely variant from Smith’s limited use of the ‘invisible hand’ metaphor. The consequential dragging deadlock and failures of unsound policies has heavy social costs in economic performance and public welfare.