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Quotable: Invisible Hand or Invisible Foot?
From the Editors
Important people are commemorated on their birthdays. But the birthdays of some, such as Adam Smith, history’s most famous economist, are unknown. However, we do know he was baptized on June 5, 1723, making it an appropriate time to remember him.
Smith is most remembered for articulating how the “invisible hand” of market interactions can coordinate a society based upon liberty--i.e., private property and voluntary exchange--more effectively than the coercive power of the state. Unfortunately, Smith’s crucial insights are overlooked by politicians who talk of liberty, but legislate and regulate away its centerpiece--voluntary arrangements. That is why we must also recall his understanding of the clumsy, visible foot of government.
“[Governments are]...without exception, the greatest spendthrifts in the society…”
“The agents of [government] regard the wealth of their master as inexhaustible; are careless at what price they buy; are careless at what price they sell…”
“Those unproductive hands...may consume so great a share...that all the frugality and good conduct of individuals may not be able to compensate…this violent and forced encroachment.”
“After all the proper subjects of taxation have been exhausted, if the exigencies of the state still continue to require new taxes, they must be imposed upon improper ones.”
“The uniform, constant and uninterrupted effort of every man to better his condition…is frequently powerful enough to maintain the natural progress of things toward improvement, in spite both of the extravagance of government, and of the greatest errors of administration... surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations.”
"In the midst of all the exactions of government…It is this effort, protected by law and allowed by liberty to exert itself in the manner that is most advantageous, which has maintained the progress...”
“[T]he frugality and good conduct of individuals seem to have been able…to repair…the waste and extravagance of government…Let us not, however, upon this account rashly conclude that she is capable of supporting any burden, nor even be too confident that she could support, without great distress, a burden a little greater than what has already been laid upon her.”
“[N]o human wisdom or knowledge could ever be sufficient [for] the duty of superintending the industry of private people, and of directing it towards the employment most suitable to the interest of the society.”
“The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would…assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.”
“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.”
“All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest in his own way, and to bring both his industry and capital into competition with those of any other man.”
Adam Smith long ago recognized that “natural liberty” needed only a very small government--far smaller than one requiring trillions of dollars of taxes and imposing innumerable added regulations and mandates each year, as in America today. If we are to restore the vision he shared with our founders--providing the broadest possible canvas for human freedom--far less of the clumsy, visible food of government is necessary, so that we can make more use of the invisible hand of mutually beneficial voluntary market arrangements.
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Gary M. Galles is a professor of economics at Pepperdine University. His research focuses on public finance and public choice (better termed the economics of government), the theory of the firm, the organization of industry and liberty. He regularly contributes the "Quotable" column, featuring timeless excerpts from classical liberals.