Is Adam Smith misrepresented in modern economics? Is his use of the term "invisible hand" misused?

Chomsky has said that Adam Smith would despise what we nowadays call capitalism. You can read what he thinks here: https://chomsky.info/warfare02/ and https://www.jacobinmag.com/2016/12/noam-chomsky-interview-donald-trump-democracy/ .

Official response from submitted

Basically, yes. Adam Smith was a moral and religious philosopher all his life, someone who came to economic thoughts from that basis. He thus had breadth and subtlety and philosophical awareness: qualities lacking in the contemporary mainstream of professional economics. The latter has reduced his comments on that "invisible hand" to a crude formula to rationalize laissez-faire capitalism (capitalism with minimal government intervention into the economy). That crude formula runs as follows: if each person pursues his/her own immediate self-interest, the end result will be the best possible outcome for everyone. If this strikes you as justification for disregarding the impact of your decisions on everyone else, then you have grasped why economists who serve the capitalist status quo - who value private capitalism unregulated by the state above all else - celebrate an Adam Smith to whom they attribute their crude simplification. If you actually read Smith's The Wealth of Nations you will quickly see how nuanced Smith actually was, how critical of many aspects of private capitalism he was, and so on. For example, Karl Marx credited Adam Smith with major insights crucial to a basic critique of capitalism (see Marx's Theories of Surplus Value), dimensions of Smith's work which the crude mainstream economists ignore or simply dont know.


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  • responded with submitted 2016-12-19 10:44:01 -0500
  • commented 2016-12-19 09:08:11 -0500
    Sorry, I didn’t know that links would not show up.
  • published this page in Ask Prof. Wolff 2016-12-19 09:06:11 -0500

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