The Bank of England released new bank notes printed on polymer instead of paper on 02-20-2020. The new £20 note features a self-portrait of Britain’s most prolific painter, Joseph Mallord William Turner (1775–1851), overlaid on his iconic painting ‘The Fighting Temeraire.’ The old £20 paper note portrayed Adam Smith (1723—1790), the Scottish philosopher widely regarded as the Father of Economics and, in many circles, the Father of Capitalism. It is interesting to note that Smith primarily collaborated with the fantabulous Scottish Enlightenment philosophers, a close-knit group who not only socialized together and called themselves the literati (people interested in literature), but they also wrote, read, critiqued, and debated each other’s ideas to make the world a better place to live. Adam Smith examined an expansive mixture of aesthetics, anthropology, history, logic, moral philosophy, physics, political science, sociology and technology to develop his profound theory of a political economy rooted in social history and basic human interactions. On March 9, 1776, a few short months before The Declaration of Independence was signed (and 247 years ago today), Smith published his second book: ‘An Inquiry Into the Nature and Causes of the Wealth of Nations‘. His masterpiece of more than 1,000 pages introduced the world to many new concepts, including the invisible hand metaphor, which he used only twice to crystallize two critical ideas. First, voluntary trades in weakly regulated, free markets produce unintentional and widespread benefits. Second, those unintended benefits are greater than the intended benefits of a regulated, planned economy. Smith recognized that labor was the original measure of exchange (money) to measure value for all commodities—so the more labor employed in production, the greater the value of that item, on a relative basis, in exchange with other items. Smith posited that free trade effectively regulates markets through fair competition, supply and demand, and the rational self-interests of competing stakeholders, which leads to the best possible market equilibrium. Every exchange of goods and services creates signals about value that reflect how difficult it is to deliver goods and/or render services. Those signals are translated into pricing systems that spontaneously direct competing market stakeholders (producers, distributors and consumers)—each pursuing their own plans—to fulfill the needs and desires of each other. Rational self-interest is neither inherently bad nor good—it is what it is, namely, human nature. It is the invisible hand that guides the forces of supply and demand, and motivates economic activity: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Producers sell and distribute their goods and services to consumers to make enough money to serve their own needs and desires. By looking out for themselves, every free market stakeholder inadvertently helps create the best outcome for all. The invisible hand is the essence of Adam Smith’s pioneering work and lasting economic philosophy. Do you prefer bank notes printed on paper or polymer? Would you have traded a portrait of the world’s first economist with the self-portrait of a prolific artist for £20 notes? How about replacing Ben Franklin with Andy Warhol on our $100 bills? Can you think of any other examples of an INVISIBLE HAND?

DSD owners should also know that Adam Smith created the concept of Gross National Product (GNP, which was replaced in 1991 by GDP to measure U.S. production) and, to this day, modern economists and social scientists continue to employ his invisible hand theory to explain the emergence of money, the division of labor, the growth of wealth and the patterns that manifest in market competition, as well as the institutions and rules that form a society. Indeed, many of Smith’s profound concepts were incorporated into other highly influential works published by the likes of David Ricardo (1772–1823), Karl Marx (1818–1883), John Maynard Keynes (1883–1946), Milton Friedman (1912–2006) and many others. While some critics argue that Smith’s invisible hand metaphor actually promotes cutthroat individualism, those detractors inexplicably overlook the fact that The Wealth of Nations was a continuation of Adam Smith’s first major publication, The Theory of Moral Sentiments, which concentrates on ethics and charity, and illuminates his moral philosophy in an ideal political economy. The ongoing debates, however, recently shifted focus to wholly new types of serious issues, such as extending the legal fiction of personhood status for corporations to the new forms of emerging artificial intelligence that many experts expect to replace human workers and otherwise disrupt nearly every sector of modern economies (and life?). Further, Federal Reserve Chair Jerome Powell testified earlier this week that our monetary policy-makers do not expect the net effect of China’s economic recovery from the pandemic to boost overall inflation higher in the U.S., but the markets should not be surprised if the Fed accelerates its pace of historic interest rate hikes to fight persistently high inflation. Yesterday, CPB’s stock price rose after CEO Mark Clouse disclosed during the FY23-Q2 Earnings Call that the snack division notched a 15% sales increase primarily due to the impressive growth of PF cookie and cracker brands. Yesterday’s FY23-Q2 financial disclosures also raised CPB’s full year profit expectations, as Goldfish varieties alone climbed another 22% to $900M and consumers continue to digest the several price increases for the snacks portfolio. While it is still unclear whether the double-digit increase in canned soup sales should be attributed to the troubling economic times or to the artificial intelligence system that CPB fed billions of data points to spit out innovative ideas for spicy new recipes, time should soon tell. Do you believe raising interest rates further will bring down price inflation to the Fed’s 2% goal anytime soon? Will low inflation matter if the historic rate hikes cause widespread unemployment? Do you why CPB’s Earnings Call ended so abruptly yesterday? Did a corporate executive use an invisible hand pull the plug automatically? Are you concerned about the increasing role that AI-powered robots are playing for big corporations? Are human drivers an endangered species? Could AI become a new form of invisible hand? Can you think of any other types of an INVISIBLE HAND?