The Visible Hands of Statesmanship: Adam Smith on Trade Policy

Abstract

Smith’s concept of the invisible hand conveys his understanding that the public interest may best be served without anyone intending to serve it, through individuals’ pursuit of their self-interest in market interactions. In this article, I examine Smith’s understanding of the vital role of the “visible hands” of statesmen in bringing about and sustaining his “system of natural liberty.” Through an analysis of his discussion of trade policy, I argue that, beyond the general principles of Smith’s science of a legislator, Smith emphasizes the importance of the particularistic knowledge and prudence of statesmen. If statesmen do not possess and act upon these attributes, Smith indicates that free trade policies could result in threats to national security, distortions of competition, the prolongation of other nations' trade barriers, inhumane and inequitable consequences for workers and manufacturers, and political backlash.