Sometimes Adam Smith's invisible hand feels like capitalism's middle finger.
It's been used to justify some of the business world's most despicable acts.
Smith, who is to capitalism what Karl Marx is to communism, is often said to have written that an invisible hand would ensure the common good if we just allow individuals to pursue their self-interest in a free market.
Do you have a problem with ruthless profiteers, reckless bankers, self-dealing corporate executives, waste-dumping entrepreneurs and all their misanthropy?
Talk to the invisible hand.
Want justice or appropriate regulation after someone swallowed your nest egg? How 'bout we just shove the ol' invisible hand in your face instead?
"Part of my battle is to correct the caricature of Smith as this gung-ho, laissez-faire individual," said Christopher Berry. "His thought is much more careful and subtle than that."
Smith, after all, was a moral philosopher. And the invisible hand? That was just a metaphor, people.
"The invisible hand Smith mentions three times only," Berry said.
Smith wrote "The Wealth of Nations," but he also wrote "The Theory of Moral Sentiments." He defended self-interest as noble, but he also applauded benevolence.
Smith didn't view the business arena as divorced from the realm of humanity in which we owe each other moral obligations.
I called Berry because I think he is as close as I can come to interviewing Smith, who lived from 1723 to 1790.
Berry is a professor of political theory at the University of Glasgow in Scotland. Centuries ago, Smith was professor of moral philosophy at the same school.
This is where Smith created the roadmap for us to evolve from oppressive feudal, agrarian economies to the amazing free-market world we enjoy today.
Smith is Scotland's greatest export--invisible hands down.
Berry just took him to China, lecturing at the Fudan University in Shanghai. "Moral Sentiments' has recently been translated. And the Chinese, with their astonishing growth, may actually take the time to read it instead of just cherry-picking the few Smith quotes that suit their greedy little arguments.
"They have had their experiments with Leninism and Maoism," Berry said. "Now, they need another model."
China wants its markets free. But then it also wants to keep political thought and individual expression restricted. This may go on for another 10 years, just as the old Soviet Union lumbered along, but it will eventually come to a crossroads and perhaps a collision.
"They can't increasingly rely on economic liberty and somehow stave off political liberty," Berry said.
Smith taught that the wealth of a nation stemmed from personal liberty. (Hooray for free markets.) He also taught that it stemmed from the moral and material well-being of its citizens. (Hooray for the people.) He also pointed out that commerce cannot be allowed to threaten the liberty and well-being of the people. (Hooray for appropriate regulation.)
The economy serves humanity, not the other way around. Even a highly specialized economy that sticks millions of people into really boring jobs.
Smith allows that the specialized mass production of say, pins, may require that some poor slob has to sharpen 48,000 pins a day.
"This division of labor makes for great productivity," Berry said. "But Smith recognized that if you simply sharpened pins all day you would become mentally dead.
"In very strong language, he calls it 'mental mutilation,'" Berry said. "That happens to workers who are confined to very simple tasks."
This is why it's imperative for government, society and business to provide education and advancement opportunities for the workers.
"His worry is that...they will become dullards. And they'll become prey to what he calls 'enthusiasms and superstitions.' That is to say, they will be more likely to go on rampages or be whipped up by demagogues."
Kind of like what we have today, from Islamic fundamentalists and neo-Nazis to the more benign folks who simply believe that former CNN business newscaster Lou Dobbs should be America's next president.
The free market should not be so free that the masses are exploited--or in the case of the financial world, looted--until they run ignorantly amuck.
Smith wouldn't raise his invisible hand to impose the costs of commerce onto society just to beat earnings expectations for a quarterly financial report.
Posthumously, Smith himself has been a victim to some of capitalism's undesirable consequences.
The university building where he did much of his pioneering thinking didn't become a shrine in his honor. Instead, it was torn down to make way for a railway station.
"I'm in the Adam Smith building, which is the biggest insult to the man there could ever be," Berry told me. "It's one of these box-standard, rather ordinary 1960s buildings. And there's nothing surrounding it. There's no road named after him. No park named after him..."
Hey, talk to the invisible hand.
(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at al.lewis@dowjones.com or tellittoal.com)
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