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The Treatment of Smith's Invisible Hand

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  • Jonathan B. Wight

Abstract

Adam Smith used the metaphor of an invisible hand to represent the instincts of human nature that direct behavior. Moderated by self-control and guided by proper institutional incentives, actions grounded in instincts can be shown to generate a beneficial social order even if not intended. Smith's concept, however, has been diluted and distorted over time through extension and misuse. Common misperceptions are that Smith unconditionally endorsed laissez-faire markets, selfish individualism, and Pareto efficiency. The author draws upon recent literature to clarify Smith's meaning and to discuss ways of improving its classroom presentation. The author argues that the invisible hand operates within a variety of institutional settings and that a number of arrangements are compatible with economic progress.

Suggested Citation

  • Jonathan B. Wight, 2007. "The Treatment of Smith's Invisible Hand," The Journal of Economic Education, Taylor & Francis Journals, vol. 38(3), pages 341-358, July.
  • Handle: RePEc:taf:jeduce:v:38:y:2007:i:3:p:341-358
    DOI: 10.3200/JECE.38.3.341-358
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Christianity, Greed, and Markets
      by Jonathan B. Wight in Economics and Ethics on 2012-02-27 20:10:49

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    Cited by:

    1. Jonathan Wight, 2009. "Sociability and the Market," Forum for Social Economics, Taylor & Francis Journals, vol. 38(2-3), pages 97-110, January.
    2. repec:kap:jbuset:v:147:y:2018:i:4:d:10.1007_s10551-017-3506-6 is not listed on IDEAS
    3. David Bevan & Patricia Werhane, 2015. "The Inexorable Sociality of Commerce: The Individual and Others in Adam Smith," Journal of Business Ethics, Springer, vol. 127(2), pages 327-335, March.

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