Sergey Oboguev (oboguev) wrote,
Sergey Oboguev
oboguev

While reading Brian Easton's excellent book “In Stormy Seas”, which contains a discussion of Smith's economic philosophy, I checked out the authenticity of the popular version of Adam Smith's famous “Invisible Hand” metaphor. The passage that was taught to a whole generation of economists, including Easton, is in fact a parody of Smith's 1776 text, written in 1948 by reknown American economist Paul Samuelson.

[...]

In book 4 chapter 2 of “The Wealth of Nations”, Smith was arguing that foreign trade is the least beneficial form of economic activity. Smith's (but not Samuelson’s) invisible hand directed individuals to favour the domestic rather than the international economy, even on occasions when the profits to be gained from international trade were higher.

[...]

Smith opposed trade protection, not because he favoured international laissez-faire, but because he believed the invisible guiding hand would render protection of domestic economies unnecessary. He believed that humans did not need the means of protection in order to achieve the goals of protectionism. His central ethic was that of patriotism.

http://www.ak.planet.gen.nz/~keithr/rf98_AdamSmithLiberal.html
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