Invisibe Hand Theory
A key thinker in political economy: Adam Smith and his Invisible Hand theory
Introduction
Adam Smith’s contributions to the world in generally and to the economic in specifically cannot be denied. According to Brandon (2011), people, especially economic students likely recognize him from “the invisible hand metaphor, division of labor examples, or the promotion of earning honest profit”. These ideologies have been discussed for over 200 years and they are often accepted as the straightforward even though there are some counter-arguments refuting his ideas. This essay will analyze Smith’s well-known theory – the “invisible hand” metaphor and provide the application of this theory in Vietnam.
Understanding
Adam Smith’s theories comprise of many fields such as philosophical, political and economic. In term of economic aspect, the “invisible hand” metaphor is one of the most famous ideologies of Smith that is still applied in the modern world. However, this metaphor seemed not as important as its implication in recent years. In fact, Smith just mentioned three times about this on three different books with different meanings. According to Kennedy (2009), the “invisible hand” appeared the first time in History of Astronomy (1758) implies the superstition about the existence of Roman God (Jupiter). This metaphor was remarked once in The Theory of Moral Sentiment (1959) which refers to the distribution of the produce by feudal lords to those working for them. It can be seen that the idea about market was not discussed in the above illusions.
On the other hand, the concept of “invisible hand” stated in An Inquiry into the Nature and Causes of the Wealth of Nations (or with brief name - the Wealth of Nations, 1776) is quite similar to its meaning in the modern economy. Smith said “By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it” (Smith, 1776). In other words, Adam Smith asserted
Introduction
Adam Smith’s contributions to the world in generally and to the economic in specifically cannot be denied. According to Brandon (2011), people, especially economic students likely recognize him from “the invisible hand metaphor, division of labor examples, or the promotion of earning honest profit”. These ideologies have been discussed for over 200 years and they are often accepted as the straightforward even though there are some counter-arguments refuting his ideas. This essay will analyze Smith’s well-known theory – the “invisible hand” metaphor and provide the application of this theory in Vietnam.
Understanding
Adam Smith’s theories comprise of many fields such as philosophical, political and economic. In term of economic aspect, the “invisible hand” metaphor is one of the most famous ideologies of Smith that is still applied in the modern world. However, this metaphor seemed not as important as its implication in recent years. In fact, Smith just mentioned three times about this on three different books with different meanings. According to Kennedy (2009), the “invisible hand” appeared the first time in History of Astronomy (1758) implies the superstition about the existence of Roman God (Jupiter). This metaphor was remarked once in The Theory of Moral Sentiment (1959) which refers to the distribution of the produce by feudal lords to those working for them. It can be seen that the idea about market was not discussed in the above illusions.
On the other hand, the concept of “invisible hand” stated in An Inquiry into the Nature and Causes of the Wealth of Nations (or with brief name - the Wealth of Nations, 1776) is quite similar to its meaning in the modern economy. Smith said “By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it” (Smith, 1776). In other words, Adam Smith asserted