Milton Friedman claimed to be a big fan of Adam Smith. Here's Friedman explaining Smith's famous "invisible hand."
So a man seeking his own gain really ends up bettering society as a whole, even though that wasn't his intention. Apply this to neoliberalism. If I can go overseas and get better labor rates I do it really because I want to maximize my own profits, but in doing so I really promote the good of society as a whole.
So I'm listening to a discussion from Chomsky and he makes a rather astonishing claim. Smith does mention the invisible hand. It's within a passage that you might describe as a critique of globalization and neoliberalism.
Apparently the phrase "invisible hand" occurs only once in the whole book. Take a look at it. Search for "invisible hand" then back up a few pages and start reading. What is Smith saying?
A merchant could look to foreign markets and possibly make more profits. But he's not going to do that. He'd prefer to take lesser profits and stay at home. Why? Because he knows that if he employs more people at home this induces further domestic industry, and he has a bias in favor of his own country. By improving the lot of his home country he really seeks the security and betterment of himself. In this sense there is an invisible hand that guides the merchant towards acting in a manner that is for the betterment of the public. He'll stay at home. He won't outsource.
Isn't that a direct refutation of Friedman's preferred neoliberal policies? And according to Chomsky this is a constant thing in your economics departments. Take the issue of the division of labor. Sure, it's a great thing according to Smith. Friedmanites pretend to care what Smith thinks and so we can understand why it makes sense to have a guy on an assembly line that does mind destroying work driving a single screw over and over.
Once again, take a look at Smith. He says you don't want to take this too far because if you do the man will become "as stupid and ignorant as it is possible for a human creature to become." This will have all kinds of disastrous consequences and hence state intervention is required to prevent us from getting to that point.
Well that doesn't fit well into the Friedmanite paradigm. So it's intolerable. The University of Chicago put out a scholarly edition of the Wealth of Nations for the bicentennial. According to Chomsky if you go to the index and look for "division of labor" you find that this entry is in fact omitted. Too unacceptable.
Search for "vile maxim" and read Smith's discussion of the "masters of mankind" that want "all for ourselves, nothing for other people." Apparently Smith is regularly going off the neoliberal script.