Wednesday, September 23, 2015


PAS president Abdul Hadi Awang asks his political rivals: HERE
“If you can accept communism, why not Islam?”
Similarly, he said the people accepted BN, MCA and MIC which promotes capitalism, an ideology pioneered by the Englishman Adam Smith.”
From  an ambitious Asian politician seeking to govern his country he demonstrates his ignorance of history and  facts. 
The obvious response is to note that Adam Smith was never an “Englishman” - he was born in 1723 in Kirkcaldy, in Fife, a county in Scotland, making him a Scotsman. He occasionally lived in England but never long enough to be confused as an Englishman, spending most of his life in Scotland.
Moreover, Smith never “pioneered capitalism” - he never knew the word ‘capitalism, which was first used in English in William Thackeray in 1854 in his novel,The Newcomes, issued in weekly parts from 1853-55. 
The Oxford English Dictionary, considered an authority on the English language, credits William Makepeace Thackeray for the first published use of the word ‘capitalism’ in his novel, “The Newcomes” (1853-55), though it is clear from its context that this refers to finance capital, rather than to a ‘system’. Financiers in 19th century novels tended to get a bad press; see also Trollope’s ‘The Way We Live Now’. 
Archival Note:
From “Lost Legacy”, 9 February, 2007:

“The origin of the word ‘capitalist’ is of much earlier vintage: in French, A. R. J. Turgot (1727-1781) used ‘capitaliste’ in his essay, ‘Reflection on the Formation and Distribution of Wealth’ (1769-1770), and William Godwin used its English version, ‘capitalist’, in his Political Justice (1794).”

Sunday, September 06, 2015


My apologies for the absence of posts since mid-August, but my domestic situation continues, and may do for some weeks yet.

My wife is in hospital though I hope she will return to our home in a few days or so. Complications in her treatment necessitated her hospitalisation since the last days of August.

While the family have rallied round, which has been most comforting, my attentions to Blogging have been minimised, at least so far has posting, or writing generally. There is queue of potential posts forming an orderly line and my recently drafted essay awaits my attentions.

Thank you


Friday, August 21, 2015


The Chinese Stock Market Crash is it because of "The Invisible Hand"
“A former hedge fund manager, MBA prof & expert witness on investments” writes HERE
The short answer is that the invisible hand not only caused the stock market crash, but that, when the market is working properly, the invisible hand causes EVERY crash... along with every change in stock market prices.  The basic thesis of the invisible hand, as coined by Adam Smith, is that markets of all kinds (stocks, groceries, energy) further the common good by incentivizing people to deliver goods and services that society wants.  Assuming the market is operating rationally, the hand has caused this crash by pulling capital out of the market, having determined that the future goods and services sold by companies in this market will not have the profits previously expected (although there is also the possibility that investments elsewhere have become more desirable).
The “invisible hand” was never a thesis “coined” by Adam Smith. 
Long before Adam Smith was born the “invisible hand” was used regularly in the 17th century - and before then too. It was used by Smith ONLY three times - twice without reference to markets and the third time as a metaphor for domestic capital investment arithmetically adding to what we now call GNP. 

Markets do not operate “rationally”. They are operated by human beings and like governments, also operated by human beings, they make many mistakes and misjudgements, including by people who quite “rationallly” act for selfish purposes closer to failure and often criminality than to the benefit of other people. The future ifsnot “determined”, nor known, and people in futures markets are no better than gamblers making guesses, much like tipsters in the horse racing business, usually with other people's money.

Tuesday, August 18, 2015


“Joann” on Easy Blog posts a Blurb (Feb 15 2014) from the respected publisher, Wiley HERE
“The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money” by Steven Drobny.
“Smith postulated it is the magic of the invisible hand of a free market that best distributes economic resources and best energizes the people and industry and innovation. Feb 10, 2014:  In his preface to the new edition of The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money (Wiley, 2014) Steven Drobny.
Of course there is always a market in selling books, and ‘confidential insiders’ newsletters from those claiming to be in “the know because of their experience”. The old wisdom postulates that a “man with money meets a man with experience. The man with experience ends up with the money, while the man with the money ends up with the experience”.
A load of gibberish inventively misquoting Adam Smith is no guide to making a fortune listening to "insiders". 

Smith never referred to the “magic of the invisible hand”, nor that there was an “invisible hand of the free market”, and not even that it “best energizes the people and industry and innovation”. These three claims are utterly untrue, though widely believed.
My new essay: “Adam Smith on Self Betterment, the Invisible-Hand, Human Actions, intended and Unintended Consequences”, addresses exactly what Smith said about his use of the "invisible hand" metaphor. It should be available shortly after September/ October.

Tuesday, August 11, 2015


Oscar Williams-Grut posts on Business Insider (3 Aug)
The second phenomenon is the insane level of government intervention in the markets. Here's Sweeney: "In China a very visible heel can stomp on the invisible hand of financial markets.
Chance Kinnet posts (11 August) on ChipChick: HERE 
Is HTC About To Go Bust?”
“Essentially, it’s the invisible hand of the free market becoming visible just long enough to give HTC the finger.
Nerd Wallet posts on Nasdaq (10 August) HERE
“None of this is intended to disparage fee-only planning. Rather, my aim is to dispel the notion that any compensation model is morally and ethically superior and to encourage you to keep in mind the presence of Adam Smith’s “invisible hand” when evaluating various advisor compensation models.”
Essentially each of these loony posts have something in common. They refer to the alleged presence in markets of a supposed invisible entity that for certain purposes can become visible to people.
1. How does the Chinese "very visible hand of the state" know where to "stomp" an entity that is invisible?
2. How does an invisible hand become visible long enough to be seen?
3. How does an investor "keep in mind" something invisible when "evaluating" compensation models?
Conclusion: their advice is inoperable and a waste of money paying for it.

Saturday, August 01, 2015


“Nannus” posts (12 July) on “Embassy of the Future” HERE 
Being Strangeled by the Invisible Hand
“Earsto1” posts (22 July)  HERE  ““Your Invisible Hand”
A message for all future and current Big West soccer players.
When playing soccer, make sure to never use your invisible hand that grows out your left rib, because you will be called for handball.
Tim Watter posts (1 August) on Reddit HERE 
“The "Invisible Hand" Of The Market Is Slapping The Poor Into Senselessness”
To which a comment is added by a reader: 

“The invisible hand of corporate fascism slapping the market into senselessness, actually.”

Wednesday, July 29, 2015


I regularly receive comments from readers, which are always welcome. Most are published, excepting those inviting readers to sex contacts (we were ‘bombed’ a few years back, hence the use of Moderation) and those that are commercial with no connection to the History of Economic Thought. 
In this connection I would welcome readers passing on news of new books and articles on Adam Smith and others, which I would feature on Lost Legacy.
A recent readers from 2007 comments on my post of 20 September, 2007: “A Misleading Quotation Exposes the Ignorance of the Quoter”
I re-post a couple of paragraphs from my original post.  They encapsulate my ideas from the early days of “Lost Legacy”.  I think they are still relevant.
“Those hunting societies in Europe and the Near East 8,000 to 10,000 years ago, after the last ice-age, that formed small settled societies, developed civil governments among which problems they faced was who lived where in the settlements. This required the invention of the role of private property. Without such a concept they could never have developed shepherding (Adam Smith’s second age of mankind) to solve the elementary problem of who owned which deer, sheep, pigs or cattle, and they would never have gone on to develop agriculture (Adam Smith’s third age of mankind), from which, as they say, the rest is history.

Now there may be some (I’ve certainly met a few) who regret the long run consequences of that fateful decision of individuals to abandon relying on hunting towards the end of the ice-age and starting mankind, unknowingly and unintentionally, to create the recent history of mankind as we know it. There are even some still surviving who would welcome the end of property, though they wish to retain all the appurtenances of civilisation at the same time. I admire their self-sacrifice of the lives of billions of humans, including themselves, who would never have been born if the ragged survivors of the last ice-age had reverted to hunting as many did in the rest of the world and were found in the same state they were in when the descendants of the pastoral and farming tribes found them from the 15th to the 18th century.”