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Are conservative Christian theology and liberal politics compatible?
Monday, 9 March 2009
Adam Smith, the invisible hand, and the deification of greed
Topic: Political and economic

Modern free market economic theory places the collective greed of the people in the place of God.  This can be demonstrated by the development of Adam Smith's "invisible hand" metaphor, from his original use of it to its use by modern economic and political theorists.

In his book An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith argued that free trade among nations, unhindered by protective duties, in the long run promotes the wealth of all of the trading parners.  In explaining why it is better for society to leave goods and capital free to flow wherever the profits are greatest, Smith explained that, although each individual trader will bargain with only his own profit in view, in the aggregate such trade will flow as if "led by an invisible hand" to increase the common wealth:

As every individual, therefore, endeavors as much he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

Smith was raised in the Church of Scotland.  Indeed, Smith almost entered the clergy before rejecting Christian doctrine in favor of Deism.  In Smith's day, the Church of Scotland was strictly Calvinistic. The Calvinist form of Christianity incorporates a strongly deterministic philosophy. Smith's upbringing, thus, taught the existence of an "invisible hand" that keeps all the forces of nature and of history in motion and determines their course--the Hand of God.  I note that this is not unique to Christianity.  Islam and historical Judaism also teach that the hand of God moves the events of the world; these three religions simply disagree over the nature of that God, how he interacts with humans, and whether he has a Son.  But, returning to my subject, at least with regard to international trade, Smith kept his Calvinistic determinism while discarding the notion of a personal God.  He retained an "invisible hand" moving economic events.  He simply identified that "invisible hand" as the impersonal force of the collective greed of those engaging in trade rather than the Hand of a personal God.  This is exactly the kind of substitution that would be expected of a Deist.

Theorists subsequent to Smith have extended his concept, and his metaphor, to encompas all economic activity.  The modern version of the theory of the "invisible hand" might be stated something like this:  "if each consumer is allowed to choose freely what to buy and each producer is allowed to choose freely what to sell and how to produce it, the market will settle on a product distribution and prices that are beneficial to all the individual members of a community, and hence to the community as a whole, guided as if by an invisible hand."  Or, stated in the terms of utilitarian ethics, the effect of collective greed, of the need to make a profit off of each other, if left to itself will result in the greatest possible social good.   Thus, theories building on Smith also deify greed, by making it both the impersonal force that determines all economic outcomes and the true source of all good (at least in economic terms).  

There is, however, one large problem with this theory.  It replaces a good God with an impersonal force that is the collectivization of a motive that is a moral evil.  We may think that it is morally good, or at least okay, for us and our friends to be greedy.  But nearly everyone condemns strangers when they greedily exploit others.  And everyone we know, I think, condemns people who greedily exploit us. When greed is turned against us, we instinctively recognize it to be evil.    Thus, those who adhere to the "invisible hand" concept believe that a large enough aggregation of evil motives usually has a good result.  Colect enough evil together and it becomes good (and a suitable replacement for God, at that).

This is simply inconsistent. 

*******

I would also point out that it is unscriptural.  The Bible contains many reproofs for nations that could be applied to the modern United States and the modern western world.  (None of them were actually originally spoken about the U.S.A.; I said only that, based on their subject matter, they could have appropriately been spoken about us).  The intereting thing is that they all have as one of their primary concerns the way we treat each other.  They condemn both greed and oppression; they do not praise either one.  See my lengthy collection of these passages at Prophecies for America (I posted it 5 years ago).  Paul actually called greed "idolatry."  (Colossians 3:5).  It sounds like he had Adam Smith in mind!


Posted by ian_j_site2 at 11:16 PM EDT
Updated: Monday, 9 March 2009 11:19 PM EDT

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