Paul Samuelson and the invention of the modern economics of the Invisible Hand

Gavin Kennedy ()
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Gavin Kennedy: Heriot-Watt University, Edinburgh

History of Economic Ideas, 2010, vol. 18, issue 3, 105-120

Abstract: Modern attributions to Adam Smith’s use of the Invisible-Hand metaphor are at variance with Smith’s teachings on the use and role of metaphors, and, therefore, they misread his contributions in moral philosophy and his political economy. This paper distinguishes between what Smith taught and meant in his Lectures on Rhetoric, Theory of Moral Sentiments, Wealth of Nations, and History of Astronomy, and what is taught about the Invisible-Hand metaphor within the modern consensus. Paul Samuelson’s Economics: an introductory analysis (1948) linked Smith’s use of the Invisible Hand metaphor to perfect competition and, later, claimed that it signalled Smith’s anticipation of general equilibrium and the modern welfare theorems. Samuelson misread Smith to assert that individual selfishness led to the «best good of all». Samuelson’s justified prestige and widespread influence on economic teaching for five or more decades led to the acceptance of this error by the profession. It concludes by tracing throught the 19 editions of Samuelson’s Economics, how he adjusted his original 1948 misstatements about Adam Smith’s use of the metaphor to fit midern economic theories.

Date: 2010
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