Alternate title: My favorite Adam Smith quote

My previous post featured many of the “favorite Adam Smith quotes” that were just published in the “Smith at 300” symposium issue of the Journal of the History of Economic Thought: Vol. 45, No. 2, June 2023, pp. 179-228. (Alas, this special issue is gated.) Amazingly, however, none of the contributors to the symposium chose Adam Smith’s most famous quote of all, the one that refers to an “invisible hand”. This omission is all the more surprising given how original and important Smith’s invisible hand metaphor is to the world of ideas. (See here and here, for example.)

In fact, this metaphor appears thrice in the works of Adam Smith. The first reference pops up in his early essay on The History of Astronomy, where Smith uses the invisible hand metaphor to compare and contrast the ad hoc explanations of cosmic events of early times: “Fire burns, and water refreshes; heavy bodies descend, and lighter substances fly upwards, by the necessity of their own nature; nor was the invisible hand of Jupiter ever apprehended to be employed in those matters.” (See Adam Smith’s Essays on Philosophical Subjects, Glasgow Edition, p. 49.) Moving on, the next reference appears in Paragraph 10 of Chapter 1 of Part 4 of Smith’s 1759 treatise on ethics The Theory of Moral Sentiments (1759), where Smith uses this metaphor to describe what today is often disparagingly referred to as “trickle-down economics”:

They [wealthy people] consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own convenience, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. 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 the society, and afford means to the multiplication of the species.

The Theory of Moral Sentiments, Glasgow edition, p. 184

But Adam Smith’s most famous reference to “an invisible hand” (and my favorite Smith quote) appears in Paragraph 9 of Chapter 2 of Part 4 of The Wealth of Nations, which is titled “Of restraints upon the importation from foreign countries of such goods as can be produced at home”, and reads as follows:

As every individual … endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

The Wealth of Nations, Glasgow edition, pp. 455-456