Monday, June 05, 2017


Arturo Pallardó posts (4 June) on “kantox” (‘Tomorrow’s FX Today’) HERE 
“Culture is like an ‘invisible hand’ – it is hard to describe and measure but has an incredibly important influence”.
“I believe culture has a phenomenal impact on performance and organisational health – and to achieve any planned strategy all people have to be aligned. I have described culture as the “invisible hand” – it is hard to describe and measure but has an incredibly important influence.”
Linking the idea of culture to the separate idea of ‘an invisible hand’ is unhelpful and redundant, though as a metaphor the ‘invisible hand’ has merits. Culture is describable - the way an organisation goes about its intended purposes - the ‘invisible hand’ is metaphoric. Giving it purpose is futile. It does not exist separate from its metaphoric meaning.
I pop into the Costa cafe located in the shoppping centre where the local Sainsbury super-market is located when I am taken by the family on occasion and where I push the trolley for safe exercise. Costa’s culture is visiblly operating. My disability is visible and Costa staff react accordingly. They also speedily prepare the coffee without fuss and take it to a table in or outside the shop. The Costa shop is clean and tidy visibly and kept that way unobtrusively.
Nobody has ever seen ‘an invisible hand’! It does not exist. Visible prices exist, as do comfortable coffee-drinking experiences… 
Metaphorically, Adam Smith used the invisible hand metaphor to describe how a risk-averse manufacturer was motivated to use capital to invest in the domestic economy by acquiring capital goods and supplies and by paying wages to domestic labourers. By so acting, the merchant pursues profits and adds to aggregate gross domestic investment and domestic incomes. 
Yes, that was all Smith meant in his metaphoric example. Yes, its that simple!
The domestic merchant or manufacturer is motivated by his own gain make his domestic investment, and is not motivated by the aggregate domestic consequences of his motivated expenditures. 

The consequences of his actions - adding to gross domestic expenditures - were so obvious they were barely worth commentary. That is probably why no political economist after Smith mentioned the ‘invisible hand’ example while Adam Smith was alive nor, astonishingly, did any major political economist from Smith’s time through to Marshall’s colleage, Pigou. Compare with today's abundance of mentions and claims for today's invisible hand ... (following Paul Samuelson's invented assertions of an invented Adam Smith in Samuelson's monumental 1948-2010 textbook, Economics).


Post a Comment

<< Home