Episode 244: Adam Smith's Invisible Handjob

June 8, 2024

Central Thesis

Adam Smith's "invisible hand" theory is not a helpful insight into economics, but rather a pernicious form of advertising that strokes the egos of the wealthy, justifies greed, and ignores the real suffering of the poor while it obscures the impacts of inequitable wealth distribution.

Key Arguments

• Smith's "invisible hand" is BS Jim argues that Smith's assertion that the rich, in pursuing their own selfish desires, inadvertently distribute wealth in a way that benefits society is a deeply flawed and misleading justification for inequality. He mocks Smith's language, pointing out the hedges ("nearly") and the inherent contradiction of claiming the rich "consume little more than the poor."
• Smith excuses the inexcusable Smith's claim that "the beggar...possesses that security which kings are fighting for" is a ridiculous statement that trivializes the hardships faced by the poor and serves to excuse the exploitation inherent in capitalism. Jim argues that Smith ignores real-world disparities and suffering.
• Historical context matters Jim points out that Smith's ideas, coupled with technological advancements like Watt's steam engine, provided a philosophical framework for the wealthy to further exploit workers, shifting wealth away from working hands and into the hands of owners. The Queen's rationale for denying William Lee's patent, he implies, was better for the average worker in England.
• Economics is advertising, not science Jim asserts that economics, unlike a true science, is inherently biased towards the interests of the wealthy, functioning as a form of advertising that encourages greed and justifies existing power structures by obscuring the realities of poverty and wealth inequality.
• Alternative ideas are suppressed Jim notes that books offering critical perspectives on industry, safety, and the exploitation of workers are conspicuously absent from bookstores, even those in politically progressive areas, suggesting a deliberate effort to suppress alternative viewpoints. He implies he feels obligated to champion those alternatives, however quixotically.

Notable Passages

• "The rich only select from the heap what is most precious and agreeable. They consume little more than the poor."
• "They are led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of society, and afford means to the multiplication of the species."
• "In ease of body and peace of mind, all the different ranks of life are nearly upon a level. . . . and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for."
• "Adam Smith and his Divine Providence Made Business bullshit is a form of advertising. It is designed to make you do things you wouldn't otherwise want to do. It's designed to accelerate the rapacity and greed of private industry."

Rhetorical Approach

Jim builds his argument through a combination of historical analysis, sarcastic critique of Smith's writing, personal anecdote (his visit to the bookstore and conversation with Janet), and analogy (comparing Smith's ideas to "treacle"). He adopts a confrontational and often humorous tone, directly addressing Smith and using colorful language to express his disdain for the "invisible handjob" theory.

Connections

• Previous Episodes: Episodes 55 and 56 (William Lee's stocking frame), episode 41 (class systems), Episode 230: Erasing Typographic Man (lithographic man), and Episode 241: TANA, ATU Edition (There Are No Accidents).
• Thinkers: Adam Smith, David Graeber, Daniel Defoe, Elizabeth Gaskell, James Watt, Jesse Singer, Douglas Rushkoff.
• Cultural Touchstones: Luddites, Don Quixote, "The Expanse".
• Books: David Graeber's Debt: The First 5,000 Years, Adam Smith's The Theory of Moral Sentiments, William Rosen's The Most Powerful Idea in the World, Brian Merchant's Blood in the Machine, Jesse Singer's There Are No Accidents, Jim's "Quickie Dictionary."