Final Discussion on Smith
Consider the following passages from Book IV, Chapter 2 of the
"Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society." (p. 45)
"But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce maybe of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it." (p. 46)
As you no doubt know, this is one of the most famous claims or arguments in the literature of the social sciences.
What conclusion is Smith defending?
What exactly is his argument?
Is it true that if each individual in a group acts rationally in pursuit of of his or her own interest, the result will be beneficial for the group as a whole?
Consider the following argument:
"There cannot really be a science of society, because society consists, with only a few exceptions of conscious and intentional interactions among individuals. So everything is already understood by the individuals involved. All that the social scientist can do is to catalogue or to summarize what those involved already know. Though not useless, such cataloguing is pretty trivial compared to what scientists do."
What would Smith say in response?