The invisible hand touched me in a bad place

Two hands reach for each other in the style of a Renaissance fresco, framed by the words The invisible hand touched me in a bad place. It takes Adam Smith’s famous metaphor literally – the market as an unseen hand that arranges our lives – and gives it the voice of someone who never consented to being arranged. Crude on the surface, it is a real critique of economic faith underneath.

Adam Smith’s metaphor for the way individuals pursuing their own interest can, without intending it, advance the good of society. In The Wealth of Nations (1776, Book IV, chapter 2) an investor who prefers domestic industry for his own security is led by an invisible hand to further an end which was no part of his intention. Later economists turned it into a general symbol of self-regulating markets.

Only three times in his surviving writings – in an early essay on the history of astronomy, where it is the invisible hand of Jupiter, in The Theory of Moral Sentiments (1759), and once in The Wealth of Nations (1776). In both economic passages he wrote an invisible hand, not the invisible hand. Its central place in economics owes more to twentieth-century textbooks than to Smith himself.

Not in the simple sense often claimed. Smith argued for free trade and against monopolies and mercantilist privileges, but he never used the phrase laissez-faire, which came from French writers. He warned that people of the same trade seldom meet together without the conversation ending in a conspiracy against the public, and he defended public education, infrastructure and some regulation.

Smith’s first book (1759) explains morality through sympathy – our ability to imagine ourselves in another’s situation. We judge our own conduct by imagining how an impartial spectator would see it, and this inner spectator becomes conscience. Smith considered it his most important work and revised it until his death in 1790; it also contains his first economic use of the invisible hand.

A puzzle formulated by nineteenth-century German scholars as das Adam-Smith-Problem – how can the author of The Theory of Moral Sentiments, which grounds morality in sympathy, also write The Wealth of Nations, which explains the economy through self-interest? Most scholars today see no contradiction; self-interest drives the market, while sympathy and justice set the moral frame within which it operates.

No, and economists agree on the main reasons. Markets fail with externalities such as pollution, with monopolies, with public goods nobody can be excluded from, and with unequal information between buyers and sellers. Joseph Stiglitz put it bluntly – the reason the invisible hand often seems invisible is that it is often not there. Smith himself was more cautious than many of his later admirers.

Yes. It is a favourite of economics, politics and philosophy students, of lecturers who teach Smith and of anyone who has heard the invisible hand invoked one time too many. It is rude enough to be funny and accurate enough to start a serious conversation about markets and consent.

The invisible hand touched me in a bad place comes as a unisex classic T-shirt, a women’s T-shirt, a sweatshirt, a premium hoodie, a mug and a sticker – the mug being the classic choice for the economics department kitchen.