Terence Corcoran: Biting the Invisible Hand once again

71moM5ghL4L._SL1500_.jpg — Peter Foster’s ninth book, Why We Bite the Invisible Hand: The Psychology of Anti-Capitalism, has been translated into Italian: Psicologia dell’anticapitalismo: Perché disprezziamo la mano invisible. (Credit: Amazon)

In 2014 Canadian journalist and author Peter Foster produced his ninth book, Why We Bite the Invisible Hand: The Psychology of Anti-Capitalism, a revealing examination of the history of the ideas of Scottish economist Adam Smith as described in his seminal economic text, The Wealth of Nations, published 250 years ago this year.

Smith’s ideas, including the creation of one of the defining metaphors of capitalism, the Invisible Hand, shaped the history of the world economy. The Invisible Hand, writes Foster, “became synonymous with free individuals interacting commercially and having their actions informed and guided by the astonishing cybernetic feedback mechanism of the price system.”

The depth of insight Foster brought to the intellectual and political conflict over Smith’s economic ideas over time is now being internationally recognized with the publication last week of Psicologia dell’anticapitalismo. Perché disprezziamo la mano invisibile, an Italian translation produced by the libertarian Istituto Bruno Leoni in Milan.

The timing could not be better for a book that explores how armies of anti-capitalist economists, intellectuals and politicians have long laboured to undermine and destroy the principles of market economics. Over time, as Foster demonstrates, the opponents of Smith’s ideas have engaged in much more ideological sinister tactics than merely biting the Invisible Hand.

The deep infiltration of anti-capitalism will be on display next week when the institution that bears the name of its intellectual founder, the Adam Smith Global Foundation, will host the Adam Smith Festival of Ideas, this year celebrating the anniversary of The Wealth of Nations.

They say it will be a fun event, with promises of entertainment, comedy, poetry, intellectual “fun” and lectures “exploring the future of the global economy with leading thinkers and Nobel economists.” The major puzzle for observers, however, is the degree to which the Invisible Hand will get bitten, mauled and even destroyed in the course of the event.

Over the years, Adam Smith and the Invisible Hand have often been dismissed as meaningless, irrelevant and distortionary. In his book, Foster singles out dozens of economic thinkers who have dumped on Smith, among them U.S. economist Joseph Stiglitz, who won a Nobel Prize in 2001. Stiglitz, long a critic of market capitalism and Smith’s ideas, claimed that the Invisible Hand “is invisible, at least in part, because it is not there.” To which Foster added: One wonders whether Stiglitz ever considered where pencils and iPhones came from.

And so, guess who’s coming to deliver comments next week at the Adam Smith Festival of Ideas? For years the Smith Foundation has found it useful to bring state-interventionists such as Stiglitz to join discussions about the lack of merit in what has become known as neoliberal capitalism.

Another invitee on the list of thinkers this year is Prof. Larry Kramer, president of the London School of Economics (LSE) and former head of the left-leaning California-based Hewlett Foundation, a charitable giant that Kramer steered into what The Wall Street Journal called a “hard left turn” that included funding university programs to find ways to “reimagine capitalism.”

When he moved to the LSE in 2024, Kramer made it clear what he thinks of ideas associated with Adam Smith. “It hardly seems controversial to note that what has for the past 50 years been the dominant approach to political economy, what people now call neoliberalism, is failing.” People, added Kramer, “have lost faith in the market fundamentalism of neoliberalism.”

One can only imagine Kramer and Stiglitz chuckling over their opportunity to munch on the Invisible Hand at the Adam Smith event next week.

There is nothing new here. Since the establishment of the Adam Smith Business School in 1986, lecturers have side-tracked into anti-free-market capitalism. Foster describes how in 2009 the lecturer was Kofi Annan, former secretary-general of the United Nations. Annan took shots at the alleged failings of the capitalist system. He ritually bemoaned inequality and implied a malign reach for the Invisible Hand. “Mortgage defaults in Florida and Fife,” he said, “are linked to health services in Tanzania and Togo.”

If anything, such anti-Smith activism is even more intense today. Therefore, congratulations to the Istituto Bruno Leoni, and may its publishing of Why We Bite the Invisible Hand serve as a model for institutes in other nations. How about a global reissue by English free-market think-tanks?

Nota Bene: Joseph Stiglitz, Invisible-Hand biter

Excerpts from “Why We Bite the Invisible Hand,” the 2014 book by journalist and author Peter Foster, former FP Comment columnist.

The concept of the Invisible Hand is not mystical, but it is counterintuitive, and requires intellectual effort to grasp. The point at which they “see” the Invisible Hand often represents the eureka moment for economists. Many never get it. One reason why many intellectuals and politicians consciously or unconsciously resist getting it is that it is potentially lethal to their interventionist pretensions. It suggests that deliberate tinkering “for the public good” is, as Smith suggested, likely to be counterproductive — analogous, perhaps, to a visible bull in a china shop …

Joseph Stiglitz — who won an economics Nobel in 2001 for his work on “asymmetric information,” the fact that buyers and sellers inevitably have different levels of knowledge — treated the concept with disdain. He never tired of repeating that the hand “is invisible, at least in part, because it is not there” …

The (2008 financial) crisis, he claimed, established above all that free markets were not “self-correcting.” But markets had never been free, and the fettered version had rarely been allowed to self-correct …

French president Nicolas Sarkozy … established the International Commission on the Measurement of Economic Performance and Social Progress (in 2008), headed by two leading leftist Nobel prize-winning economists, the ubiquitous Joseph Stiglitz and Amartya Sen. The task of Stiglitz and Sen had been to confront “dissatisfaction” not just with the state of statistical information but with alleged “overreliance on free market principles.”

Stiglitz laid out his thoughts on the inadequacy of traditional statistics in a newspaper article. “Are statistics giving us the right signals about what to do?” he pondered. But his question begged more fundamental ones, such as: Who was this “us” and what did “we” plan to “do” with these “signals”? … Measurement is crucial to judging policy success, but it also tends to be the mother of activism, on the basis of the delusional conviction that if you can measure it, you can improve it.

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