Adam Smith early in his Wealth of Nations, explains that where there is a need, capital, seeing opportunity for profit, will go to that need and supply it. For a price, of course. Since the incentive is the profit, the need must be expressed, at least potentially, in money. If there's no money in a particular market, capital cannot see any opportunity.
What Adam Smith didn't observe in his book was what capital couldn't see, and couldn't see it not because it didn't want to see it but because it is simply blind to it. And that invisibility is extreme poverty. In a money economy, where there is extreme poverty -- no money -- there is no market and nothing to draw capital to it.
Poverty is an embarrassing gap in Smith's book.
Smith's book also doesn't see how short-sighted the invisible hand is. Were the employers of labor to raise wages, consumption would in time likely grow, incentivizing more production and more employment and yet more consumption and more production and more employment and...an upwards spiral of increasing wealth from the top to the bottom and back up top. But the market, as we know from the 2008 collapse, is short-sighted, too short-sighted to see the advantage of raising wages now to benefit from the upward spiral later. In the short run, the market incentivizes the producer to keep wages as low as possible. Marx and Keynes saw this alike. There is no immediate incentive to spend more on labor. And that's because of the necessary character of the invisible hand.
The point of the "invisible hand" metaphor -- and its groundbreaking emergent-property insight -- is very much like Darwin's natural selection, emphasis on "natural", and Galton's wisdom of the crowd. Without any intent to do so, it produces a beneficial end-goal for all members participating. "Without intent" means "without intervention" on the part of thought or analysis or theory. The virtuous goal happens all by itself unintended, like natural selection and the wisdom of the crowd.
The focus in natural selection, the crowd and the invisible hand is on their successes -- natural selection yields amazing abilities of phenotypes, the distributed crowd yields accuracy beyond experts and the invisible hand yields consumer surplus and efficiency and wealth creation, all by themselves without any intent to do so. Extinction and starvation not so much -- out of sight, out of mind. Even market bubbles -- the failure of the crowd's distributed information -- is out of sight. Opportunity blinds us with wishful thinking. Unlike soap bubbles that are visible until they burst, a market bubble is invisible to those that make them until they burst. Then they're more than visible, they're felt.
To see beyond the incentives or to breed a species or to prevent a bubble requires thought, theory and the predictive foresight theory affords, and intervention. Maybe Smith could be excused for leaving out the starving if his project were an exclusively scientific one to describe and explain the market, and not to describe or explain circumstances where there is no market, like extreme poverty. If that were so, he would be exclusively analysing the market, not explaining how it should work, but only how it does work. But the latter end of his book is full of prescriptions: educators shouldn't be given salaries but should be paid directly by their students; commercial interests should not be allowed to lobby government lest they intervene in the market. So the book is not just scientific. It has a prescriptive point as well. The poverty gap is not excusable.
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