In the previous post, we defined two invisible hands.
The first one was the invisible hand of human nature which combined the following ideas to produce welfare and peace of mind:
- A belief in a Supreme Being
- Principle of Self-Motion
- Human Communication
- Production = Revenue or Consumption
The second one was the invisible hand of physical nature which has the following ideas producing regular and irregular natural events:
- Fire burning
- Lighter things flying
- Heavy things falling
- Water refreshing
The next step is to find out if the Eastern philosophers have something similar to the invisible hand that Smith had discovered. Since east and west live in the same universe, then the East should have discovered the invisible hand as well. Actually, the East had discovered the invisible hand much earlier than the West, calling it as Dharma in India, and the Tao in China.
What is Dharma?
Wiki defines Dharma as:
behaviours that are considered to be in accord with rta, the order that makes life and universe possible, and includes duties, rights, laws, conduct, virtues and ‘‘right way of living.’’
Dharma in the context of Smith’s works has the following major derivatives:
1. Rta dharma is the collective name for the order or nature of the physical universe. This can be called physical dharma or the invisible hand of physical nature or mother nature. This matches the description given by Smith as the invisible hand of Jupiter that caused extraordinary natural events like storms.
“Fire burns, and water refreshes; heavy bodies descend, and lighter substances fly upwards, by the necessity of their own nature; nor was the invisible hand of Jupiter ever apprehended to be employed in those matters.”
2. Varna dharma is the term for the natural social classes in society which the ancient Hindus and the Chinese described. For example, the Hindus described four castes, while the Japanese writer Musashi gave five ways which everyone passes through.
Smith describes this in The Theory of Moral Sentiments as the invisible hand of society which distributes resources naturally through the division of labour of the landlord class and worker class. In The Wealth of Nations, he later elaborates on classes as those who live by rent (ruling class), wages (working class), and profits (merchant class). Many people just cite the sentences near the word ‘invisible hand’ to justify selfishness, ignoring the obligation of the rich to distribute their resources to others via employment, which Smith mentioned too:
“the proud and unfeeling landlord views his extensive fields, and.. in imagination consumes himself the whole harvest that grows upon them.. The capacity of his stomach bears no proportion to the immensity of his desires, and will receive no more than that of the meanest peasant. The rest he is obliged to distribute among those.. who.. keep in order all.. baubles and trinkets.
The rich … divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species” (Theory of Moral Sentiments)
Unlike Mercantilists and Economists who see utility or pleasure as the purpose of life, Smith and people of dharma see peace as the real goal:
In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all.. are nearly upon a level, and the beggar who suns himself by the side of the highway possesses that security which kings are fighting for. (Theory of Moral Sentiments)
3. Svadharma is the name for personal dharma. It is equivalent to the principle of self-motion, described by Smith as the chess pieces moving by through a Player’s hands.
The man of system is apt to be very wise in his own conceit. He is often so enamoured with.. his own ideal plan of government.. He establishes it completely without any regard to the great interests or strong prejudices which may oppose it. He imagines that he can arrange the members of a great society with as much ease as the hand arranges the different pieces on a chess-board. He does not consider that the pieces on the chess-board have no other principle of motion besides that which the hand impresses upon them.
But that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress on it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously.. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder. (Theory of Moral Sentiments)
A boy who is interested at programming will be a better programmer than a person who is not. He will not know that he is actually helping society by making good software programs (his domestic industry). He just knows that he is doing what he loves to do. If his ‘sovereign’ parents pushed him to be a singer instead (an industry foreign to him), he and society would not benefit as much:
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 may be of the greatest value, every individual necessarily labours to render the annual revenue of the society as great as he can. He generally 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. (Wealth of Nations)
Proof of the Difference of the Physical and Human Invisible Hands
The difference in the dynamics of both invisible hands are described by Adam Smith in Part 3, Section 5 of the Theory of Moral Sentiments as different rules which promote the order of the world:
The general rules which distribute prosperity and adversity appear to be perfectly suited to mankind’s situation in this life. Yet they are not suited to some of our natural sentiments. We naturally love and admire some virtues so much that we wish to bestow on them all sorts of honours and rewards. On the contrary, we detest some vices so much that we desire to heap on them every disgrace and disaster. Magnanimity, generosity, and justice, command so much admiration.. The industrious knave cultivates the soil. The indolent good man leaves it uncultivated. Who should reap the harvest? The natural course of things decides it in favour of the knave. Mankind’s natural sentiments favours the good man. Human laws are the consequences of human sentiments. They forfeit the life and the estate of the industrious and cautious traitor. They reward the fidelity and public spirit of the improvident and careless good citizen, by extraordinary recompenses. Thus, man is by Nature directed to correct that distribution of things which she herself would otherwise have made. The rules which she prompts him to follow for this purpose are different from the rules which she herself observes. She bestows that reward on every virtue, best fitted to encourage it. She bestows that punishment on every vice, best fitted to restrain it. She is directed by this sole consideration. She pays little regard to merit and demerit bestowed by people’s sentiments. On the contrary, man pays regard to merit and demerit only. He would try to render the state of every virtue precisely proportional to that degree of love and esteem, and render the state of every vice proportional to his contempt and abhorrence for it. The rules which Nature follows are fit for her. Those which man follows are fit for him. But both are calculated to promote the same great end: the order of the world, and the perfection and happiness of human nature. (Simple Theory of Moral Sentiments)
It is morality that corrects the wrong distribution of resources caused by Mother Nature. In other words, morality, which is part of human dharma or the invisible hand of human nature, corrects the mistakes of the invisible hand of Mother Nature, to promote the happiness of humans and the universe:
They are led by an invisible hand to make nearly the same distribution of life’s necessities which would have been made, had the earth been divided equally among all its inhabitants. (Simple TMS)
By destroying Samuelson’s selfish and even animalistic invisible hand, and by thoroughly analyzing the ideas represented by the invisible hand of Smith, we are able to equate it to the Eastern concepts of Dharma and Tao, closing the loop or the gap between Western and Eastern philosophy. This proves that the findings of Eastern and Western philosophers on the necessity of morality in human beings, in order to promote human happiness, are one and the same, though seen from different perspectives. We can then use this combined philosophy to create sustainable economic and political systems that match human nature as it was designed by the Author of nature, for the ultimate purpose of happiness.
Edit 2/2017: Changed Bhagavad Dharma into Varna Dharma to be more precise
Edit 9/2017: Added Bill Gates, Ukraine, and North Korea