Guatemala, March 9, 2026
There are few occasions in life when one can celebrate a historical milestone while occupying a position particularly suited for doing so. This year marks my eleventh year as Director of the Department of Economics at Universidad Francisco Marroquín. In Guatemala, there is hardly a better position from which to celebrate the 250th anniversary of the publication of An Inquiry into the Nature and Causes of the Wealth of Nations, published on March 9, 1776 in London by Adam Smith.
Throughout my academic career I have devoted time and effort to studying and understanding the work of the author of what is affectionately known simply as The Wealth of Nations. For several years I taught economics seminars entirely devoted to The Theory of Moral Sentiments (1759), and for two years I also developed that seminar for faculty members.
Later, in what has been one of the projects I have cherished the most during my time in this position, the first UFM Companion to Great Economic Thinkers was dedicated to Adam Smith, with our colleague and Smith scholar Julio H. Cole serving as editor. This companion was presented at the Southern Economic Association conference in Washington, D.C. in 2016.
My own contribution to that companion was a study of The Wealth of Nations in relation to Carl Menger’s Principles of Economics, arguing that Menger in some important sense was working within the Smithian tradition of economics. That paper was later published in the Journal of Applied Business and Economics in 2017.
What I wish to emphasize about Adam Smith is that no matter how much time one dedicates to his work, it always feels contemporary. It never disappoints and always leaves the reader wanting more.
Today, however, on the 250th anniversary of his most famous book, I do not want to discuss all the possible aspects of Smith’s work. Instead, I want to focus explicitly on what I consider the most important metaphor in the history of Western economic thought.
“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.”
(Smith 1776, IV.ii.9)
This may well be the most important metaphor in the entire history of modern Western scholarship. The idea of the invisible hand was the discovery—or the invention, depending on one’s interpretation—that allowed the development of economics as a complete social science.
Motivations matter. Rules matter. But we must not neglect—for better or for worse—the unintended consequences of the thousands and thousands of voluntary actions that take place and ultimately sustain society.
The greatest discovery of economics is that a social order can emerge from individual decisions aimed at satisfying self-interest. This order creates a cooperative horizon—a remarkable environment in which individuals pursue their own goals while, without intending it, helping all those who wish to cooperate peacefully within rules of just conduct.
Such an order does not require a creator, a designer, or a manager. It changes, evolves, and is imperfect, yet capable of improvement through the dispersed experience of millions of individuals cooperating openly and voluntarily. For that reason, it is constantly updated and remains aligned with what individuals actually value and are willing to sacrifice for.
The extended order, to use a Hayekian expression, illustrates something deeply important about free Western societies: they are not nihilistic. In Nietzsche’s sense, nihilism represents the devaluation of all values—nothing remains worth living or dying for. Yet the cooperative order shows precisely the opposite. Millions of individuals value countless different ends, purposes, and aspirations. This plurality of goals—sometimes even producing social trends—is the very opposite of nihilism.
In 1776, at the height of the Scottish Enlightenment, and just before the culmination of philosophical modernity with Kant and Hegel on the European continent, Smith employed—perhaps unintentionally—a metaphor that for several centuries positivist science would dismiss as a mechanism or method for producing new knowledge.
It would take until the twentieth century for thinkers such as Heidegger, Gadamer, and Richard Rorty to recover the role of metaphor as a source of new knowledge or what might be called extra-methodical truths. Kundera or Dickens, in Rorty’s view, illustrate this form of expressing lived experience in ways that carry powerful connotations of truth beyond the narrow format of the correspondence theory of knowledge. One can see this in Richard Rorty’s essay “Philosophy as Science, as Metaphor, and as Politics,” included in Essays on Heidegger and Others.
Returning to Smith, the importance of this metaphor is such that it provided enough conceptual presuppositions for positivist economists to build the discipline of economics. At the same time, broader traditions of economic thought—such as the Austrian School—found within it the intuition necessary to develop an entire intellectual tradition.
For example, Carl Menger’s explanation of the emergence of money without a creator or designer, Ludwig von Mises’s notion of social cooperation as the foundation of social order, and Friedrich Hayek’s concept of spontaneous order—and, in my view, his later idea of complex orders—can all be understood as developments or elaborations of Smith’s metaphor.
To call them “footnotes” is not meant in a pejorative sense. These are enormously important developments, clarifications, and expansions necessary for the historical unfolding of ideas. Yet they also remind us of the magnitude of Smith’s original insight and of his expression of that insight through the metaphor of the invisible hand.
There is another development that deserves attention as well. It is less recognized and less frequently remembered, yet extremely important: Robert Nozick’s Anarchy, State, and Utopia. In that book, the notions of Invisible Hand Explanations and Hidden Hand Explanations play a crucial role in the development of many of Nozick’s arguments. These ideas also contrast with what James Buchanan emphasizes in his essay “What Should Economists Do?”
The contrast is between the belief that economic and social order require a designer, controller, or manager, and the recognition that such centralized design is unnecessary precisely because of the decentralized mechanism of social cooperation first identified by Adam Smith.
I would also like to mention another article by Buchanan that I consider particularly valuable for this anniversary: The Triumph of Economic Science: Is Fukuyama Wrong?
Buchanan writes:
“In some summary analysis, the triumph of the science of economics in providing the foundation of the organization of economies through markets must be accompanied by a near revolution in the understanding of what liberal democracies mean.”
(Buchanan 1993, 275)
What does Buchanan mean by this? In essence, he is asking whether economists—through the rational tools of theoretical and empirical analysis—have actually succeeded in convincing societies that the rational choice is to allow markets to function freely. It seems that we are still far from achieving that understanding.
To accomplish this task, we must properly understand what Fukuyama refers to as liberal democracies—which, in the opinion of this humble author, is precisely what Smith captured in metaphorical form 250 years ago: a cooperative social order governed by endogenous rules that respect individual purposes and desires, protect property and reputation (as emphasized in The Theory of Moral Sentiments), and leave room for the wide diversity of non-destructive human aspirations.
Happy 250th anniversary to The Wealth of Nations—and to the most important metaphor in the history of Western academic thought.
P.S. No positive theoretical construction—not the Cobb–Douglas production function nor the Solow model of economic growth—has had, or will likely ever have, the intellectual impact of Smith’s metaphor. As Edmund Husserl warned, positivism risks decapitating philosophy. And philosophy, in a fundamental sense, is the capacity to think—which ultimately means the capacity to generate meaning.
References
Buchanan, James M. 1993. “The Triumph of Economic Science: Is Fukuyama Wrong?” Public Choice 77 (2): 275–284.
Hayek, Friedrich A. 1988. The Fatal Conceit: The Errors of Socialism. Chicago: University of Chicago Press.
Heidegger, Martin. 1971. Poetry, Language, Thought. New York: Harper & Row.
Menger, Carl. 1871. Principles of Economics. Vienna: Wilhelm Braumüller.
Mises, Ludwig von. 1949. Human Action: A Treatise on Economics. New Haven: Yale University Press.
Nozick, Robert. 1974. Anarchy, State, and Utopia. New York: Basic Books.
Rorty, Richard. 1991. Essays on Heidegger and Others: Philosophical Papers, Volume 2. Cambridge: Cambridge University Press.
Smith, Adam. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. London.
Smith, Adam. 1759. The Theory of Moral Sentiments. London.