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Warren J. Samuels (with the assistance of Marianne E. Johnson and William H. Perry), Erasing the Invisible Hand. Essays on an Elusive and Misused Concept in Economics

Bruna Ingrao
p. 503-508
Bibliographical reference

Warren J. Samuels (with the assistance of Marianne E. Johnson and William H. Perry), Erasing the Invisible Hand. Essays on an Elusive and Misused Concept in Economics, Cambridge : Cambridge University Press, 2011, xxviii + 329 pages, ISBN : 978-0521517256

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1“Economics, as a science that purports to deal with the objective and the confirmable, ironically has as its foundational concept something metaphysical —the Invisible Hand.”(169). The ‘invisible hand’, a “quaint” and “fuzzy” concept of widespread use, is the object of detailed critical analysis in Warren Samuels’s book. Samuels classifies some dozen of ill-defined meanings (the market, competition, the price mechanism, private property, self-interest, the profit motive, entrepreneurship, the principle of unintended consequences, harmony of interests, self-regulating order, and so on), and various functions of the concept, to conclude that it is ambiguous, has no proper ontological status, is used mostly in “non specific and inconclusive” ways, and “so far as the great bulk of candidates is concerned, is only words.”(150). Whether as a metaphor, some other figure of speech, wishful thinking, or a blurred and confusing reference to various aspects of a market economy, it adds nothing substantial to our knowledge. The ‘invisible hand’ concept—it is repeated so many times in the book—is specifically a powerful instrument of social control, whose main function is to obfuscate the visible structure of power in society. According to the author, the invisible hand imagery in economics, far from being foundational scientific theorizing, is basically an ideology (or a corpus of ideologies) to extol the virtues of market capitalism and produce a psychic balm against the visible inequalities of power and income in Western market societies.

2In the Preface, Samuels reminds the readers that the content of the book is part of an extensive research project he has pursued for many years, filing occurrences of the words ‘invisible hand’ in economic theory, history of economics, the press or political discourse, and in a variety of historical sources, including theology, sociology, philosophy, literature (20 ff.). The screening of such an ample collection of sources was planned to be the subject of three further volumes, to be edited with the cooperation of other scholars, because of the advancing age and poor health of the promoter. Unfortunately, Samuels died in August 2011. Scholars in the history of economics regret his loss and remember his long-life scholarship and his contributions to the discipline.

3The ten essays composing the book deal with a general overview of the question (chap. 1) ; a detailed examination of Smith’s vision of political economy and philosophy (chap. 2) ; the manifold identities and functions of the “invisible hand”—the core of the book’s argument (chap. 3) ; reflexions on systems of beliefs, most of which are along Marxian and Paretian lines of argumentation on ideologies for social control (chap. 4) ; a methodological chapter on naturalism and supernaturalism concluding that economics “is simultaneously an intellectual discipline and religion” (chap. 5) ; the “invisible hand” in the perspective of the political use of language (chap. 6) ; the epistemology and ontology of the “invisible hand” (chap. 7) ; the rule of law, free markets and the role of government, addressing Smith, Friedman, Robbins and Hayek (chap. 8) ; a discussion of the survival problem and Pareto optimality (chap. 9) ; and the summing up of the main conclusions (chap. 10).

4The subjects dealt with are recurring, in circular architecture, as the author underlines. The same arguments come back in various contexts, with repetitions that could have been avoided to make the book more readable. It is the main weakness in terms of exposition. The ample array of subjects makes it difficult to disentangle specific criticisms of the ‘invisible hand’ imagery from digressions on the most varied themes, some of which are highly questionable. Thus, to point out that the Enlightenment is not a substantive reality as a loaf of bread (114), is superfluous to any scholar having some knowledge of the rich literature on history of philosophy in the 18th century. Similarly, the dismissal of metaphors in chap. 6 misses a crucial point on the plasticity of human cognition, amidst long quotes not essential to the issue. Let us stay with the main theses in the book.

5In terms of content the book has points of strength and weaknesses. The aim to point out the multiple ambiguities and pitfalls of the ‘invisible hand’ idea, as it is mentioned in both academia and the press, is most welcome. The author effectively criticizes the fuzzy references to ‘invisible hand’ theorems or theories as foundational concepts in economics, on textual evidence mostly taken from the economic literature of the 1960s and later, that he relates to neoclassical, mainstream economics. His arguments aim at deconstructing the ‘invisible hand’ idea, showing how poorly it is specified, how ambiguous it is when dealing with specific market processes, how poor is the discourse on the functioning of market economies when deprived of explicit reference to institutional framework and political context. According to Samuels, the only admissible use of the ‘invisible hand’ concept is in considering invisible-hand processes, that is processes of social interaction with unintended consequences, either positive or negative for the different social groups involved, and their aggregation effects. These involve both collective action and private interests, both the State and the markets, which Samuels conceives as intertwined through institutions, the legal system, and the control and manipulation of power by elites. The ‘invisible hand’ concept, he argues, adds nothing to our knowledge of market economies, but dangerously obscures the visible institutional mechanisms, the visible or hidden networks of hierarchies and power that make our market economies work.

6It is a crucial message in the current conditions of market economies that have experienced severe financial crises, and face high unemployment rates and income inequalities on a low-growth path. To look at markets as complex institutional frameworks with changing systems of incentives, connected to political systems in national and international scenarios, should help avoid both catastrophism and Panglossian platitudes, when facing financial crises, economic collapse or severe market failures. This is not the direction towards which the author is proceeding. He attacks the ‘invisible hand’ idea as the straw man to attack free market theories and ‘laissez faire’ policies, both poorly analysed in the book, since they are all despairingly disposed of as mythologies and ideologies. The attack to the fuzziness of the ‘invisible hand’ idea with the ultimate aim of debunking any idea of free markets and laissez-faire policies is open to serious criticism on the historical and methodological perspectives. It does not help advance a fruitful debate.

7In terms of the history of economics, attention is concentrated on Adam Smith, the only economist to whom specific historical reconstruction is devoted in connection with the ‘invisible hand’, and in philosophical vision and economic theorizing. Samuels observes that the 19th century economic literature offers scarce references to the invisible hand, and just a few among the prominent economists of the 19th century or first half of the 20th century are thoroughly analysed, possibly because none of them fits well into Samuels’ straitjacket of economists’ mythological theorizing about the ‘invisible hand’ with no reference to institutions and historical change. Most of the 19th century economists addressed historical change, institutions and their evolution, and the political side of the economy ; many of them emphasized the need for State intervention in redistributive policies or other areas of collective interests, even when they were in general in favour of free trade, and freedom of enterprise. Ricardo addressed conflicts of interests between landlords and other ranks of society, as between the directors of the Bank of England and the general public. J.S. Mill, a scholar in philosophy and political science, was well aware of the role of institutions, and a keen defender of principles of social justice as much as a keen defender of freedom. Cournot wrote books—the bulk of his scholarly production—studying civilization in history ; he was a defender of protective policies in case of international imbalances between nations being first and late comers in manufacturing and international trade. Jevons, an outspoken defender of free trade, theorized State intervention in case of the Post office and other specific situations. Walras, the ‘invisible hand’ theorist par excellence in his definition of competitive markets with auctioneer, defined himself as a socialist, conceived redistributive theories, and in applied economics dealt with a variety of cases where State intervention is appropriate. Marshall devoted lengthy passages of his works to the effort of fusing evolutionary theory with market theory proper, with reference to national character, customs of providing for the future, networks of firms in districts, and the visible activities of professional traders, entrepreneurs, and trained workers. Schumpeter, a political scientist as much as an economist, conceived the progressive collapse of competitive markets due to institutional and cultural evolutions in the later stages of capitalist societies. Wicksell, a social reformer, was deeply preoccupied with monetary instability, much as Fisher or Keynes, both dealing with financial crises and the costs of deflation. As it seems, none of the prominent scholars in economics from the late 18th century to the mid 20th century was a vulgar upholder of the ‘invisible hand’, though most of them were outspoken defenders of freedom of enterprise, free trade, and resource allocation through competitive markets.

8Thus, Samuels’s attack against the ‘invisible hand’ imagery seems directed primarily to scholars of the Chicago school in the second half of the 20th century ; it would have been better to explicitly list and criticize the scholars, whom he deemed to have marketed the most superficial versions of laissez-faire ideologies. There are quite a number of them in the profession, of course, and the arguments would have been more to the point ; the references to “such people” and “such folks” (251) do not help the reader. Not every scholar in academia is a zealot of the ‘invisible hand’ religion, as indeed Samuels himself here and there recognizes. In the last fifty years, the profession has seen quite a number of Keynesian and Post-Keynesian addicts, Neo-Institutionalists, Neo-Austrians, theorists and practitioners in development economics, scholars in cognitive economics or game theory, who dealt with market failures, State intervention, social conflict, innovation or redistributive policies. Let us just mention Leijonhufvud, who devoted years of his scholarly work to deconstruct the idea of the auctioneer, or the Nobel prize winners Amartya Sen and Joseph Stiglitz.

9One chapter is devoted to Hayek, with little effort at understanding his position with sympathetic eyes. Assuming a rather conventional interpretation, Hayek is disposed of as merely conservative, adverse to change. He is recognized as a serious scholar, with some good intentions ; but he is accused of inconsistency in his work between his normative attitudes and the predication of the unintended consequences principle, a schizophrenia between his argument and his practice. Hayek, indeed, has always explicitly argued on the basis of a system of values, and never denied the possibility to rationally improve legislation within a system of values. It is impossible to understand Hayek (and to disagree with him on solid ground) forgetting that he was writing in the years of high theory and highly totalitarian regimes, whose political elites devoured the lives of millions under the banner of absolute State primacy over freedom to choose. This is no excuse for the residual pitfalls in Hayek’s theoretical architecture ; but it is certainly a good reason to suspect and denounce ideology, social control and abusive psychic balm in the plain denigration of free markets and Western market societies—the primary aim with which Hayek wrote The Road to Serfdom, a book Keynes defined as a “grand book”. Moreover, in economic terms the core of Hayek’s message in defending free markets against central planning was to preserve an open space for innovation and change, i.e. a social environment favourable to the emergence of fruitful change through the opportunities offered by freedom, personal responsibility, and competition.

10The message of Samuels’s book, thus, is very unbalanced in polemical stance : scarcely any mention of the disasters of State intervention, be they political or economic ones ; or of State failures or State ideologies, which urgently need to be deconstructed. This side of the coin is absent in the book, as if the possible breaking of the survival requirement could be the result only of free markets ; but in the history of humanity the most destructive episodes of famines, with millions dying of hunger, have been the visible effect of State intervention in communist countries. Samuels recognizes that there are widespread systems of beliefs favouring government intervention, which also do not correctly describe the role of government and markets ; but interventionist ideologies receive no critical attention, as if the dominant ideology were unrestricted ‘laissez-faire’, which is obviously true neither in the last century nor in the present one. As if the circa 7 billion citizens of our global world were running no major risk of unintended or intended consequences by the abuse of State power, and were all living in pure, laissez-faire societies.

11Underlying the criticism of both Hayek and Robbins (more nuanced towards the market plus institutional framework Robbins adopted) is a misunderstanding of the basic tenets of liberalism : the idea that defending the role of free markets and the aim of limiting State intrusion in the private sphere imply anarchism, erasing any role for the State and public action in society. This is certainly neither the position of Robbins and Hayek, nor of classical liberalism that assigns a crucial role to justice and to the rule of law as the ultimate foundation of free societies. For Samuels, however, the rule of law is another psychic mythology and “law and morals constitutes policy” (240). “At bottom, law is politics—politics by other means.”(241). He was perhaps not aware that such a Paretian mood destroys the very possibility of civic discourse and collective deliberative action, undermining the trust in the certainly imperfect, but precious foundation of Western societies on freedom, ultimate moral values and the rule of law, the only foundation on which future progress will depend.

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Bibliographical reference

Bruna Ingrao, Warren J. Samuels (with the assistance of Marianne E. Johnson and William H. Perry), Erasing the Invisible Hand. Essays on an Elusive and Misused Concept in EconomicsŒconomia, 3-3 | 2013, 503-508.

Electronic reference

Bruna Ingrao, Warren J. Samuels (with the assistance of Marianne E. Johnson and William H. Perry), Erasing the Invisible Hand. Essays on an Elusive and Misused Concept in EconomicsŒconomia [Online], 3-3 | 2013, Online since 01 January 2014, connection on 21 April 2021. URL:; DOI:

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About the author

Bruna Ingrao

University of Rome La Sapienza

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Licence Creative Commons
Les contenus d’Œconomia sont mis à disposition selon les termes de la Licence Creative Commons Attribution - Pas d'Utilisation Commerciale - Pas de Modification 4.0 International.

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