According to Adam Smith, two major benefits flow from the operation of the “invisible hand.” First, in the moral sphere, the invisible hand allows people to become moral beings. As they come to see themselves through the eyes of others in the “great school of self-command,” they come to understand and act with propriety; they become people who are not only praised but praiseworthy. Second, the invisible hand operates in the sphere of day-to-day transactions, the economic sphere of trade and innovation. Together, these two spheres are largely responsible for the vast increase in human flourishing that we have enjoyed since Smith’s time.
The key lesson for us today is a Smithian one — economics is about cooperation and the peaceful achievement of specialization that has brought about an enormous increase in our standard of living over the recent past. Like Smith, I am an optimist; I shall argue that we have much to be optimistic about today. However, Smith also foresaw a reason for caution: faction. I suggest that his notion of faction helps us understand crony capitalism, party politics, and the less savory side of cooperation today.
About the Speaker: Sandra J. Peart became the fourth dean of the Jepson School of Leadership Studies in August 2007. She obtained her doctorate in economics from the University of Toronto in 1989. She began her career as an assistant professor of economics at the College of William and Mary and then joined the faculty at Baldwin-Wallace University. She was a visiting scholar at the Center for Study of Public Choice at George Mason University in 2004–05, and the following year, she was a fellow of the American Council on Education. She is president of the International Adam Smith Society and a past president of the History of Economics Society, where she began the Young Scholars Program. Dr. Peart has published more than 60 refereed articles and another 50 chapters in books and encyclopedias in the areas of constitutional political economy, leadership in experimental settings, ethics and economics, and nineteenth and twentieth-century economic thought. She has written popular articles on leadership, ethics, higher education, and economic themes for the New York Times, The Chronicle of Higher Education¸ USA Today and the Washington Post. She is the author or editor of nine books, including most recently Escape from Democracy: The Rule of Experts and the Public in Economic Policy, forthcoming from Cambridge University Press.
