Imagine for a moment a structural engineer who has been tasked with engineering a bridge to cross a wide river. The engineer understands the strength and weight of the steel, concrete, asphalt, and other various materials that will be assembled to build a sound structure. The engineer also understands the pressures that wind, water current, temperature, and vehicle traffic will place on the structure.
The engineer also believes an “invisible hand” in some fashion influences the structure but is not easily measured by observation alone. The engineer decides that this force should be acknowledged but it’s influence need not be calculated in the engineering of the bridge.
Would you trust the bridge?
Fortunately the science of engineering has for nearly 400 years understood the force of gravity and how to measure this “invisible hand” that holds together our universe. Measuring the “invisible hand” of gravity allows the construction of structurally sustainable bridges.
Economists today for the most part evaluate our economy in a similar fashion as our hypothetical engineer. About 250 years ago, the economist and moral philosopher, Adam Smith wrote The Theory of Moral Sentiments and The Wealth of Nations both of which describe an “invisible hand” as a force that influences our society and economy. While the force is widely acknowledged there has been very little effort to discover its source or measure the effects. Observable examples of forces acting on the economy occur constantly – they are just not given a value.
For example, a significantly undervalued economic force is the value provided by an adult caregiver for a friend or family member with a debilitating disease or injury. The economy is measured solely on the quantity of goods and services sold and all of those measured contributions are part of the Gross Domestic Product.
A domestic caregiver is not selling services to contribute to GDP and if the caregiver has taken time away from work they actually reduce their contribution to the economy. Additionally by providing care they may have displaced a professional caregiver because there is now one less patient to care for. Standard economic theory could actually consider the domestic caregiver a drain on the economy even though anyone with a conscious understands the value of having loved ones around in a time of need.
In his earlier book, The Theory of Moral Sentiments, Smith notes that while a person may act in their own self-interest there is a sixth sense of sorts “which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.” Smith at the time related this force to sympathy.
Empathy I believe is the source of Smith’s “invisible hand” and since empathy involves understanding the emotional states of other people, he was very close in identifying it as sympathy. Furthermore Smith’s association with a sixth sense could in fact be correct. Empathy is triggered in our minds when we learn of someone else’s condition through what are called mirror neurons which fire as if the experience is happening to us directly.
Most early economists like Smith where also philosophers. Conversely many of today’s economists consider the humanities irreverent. We can no longer allow economic theory to escape the scientific reality that the “invisible hand” not only exists – but can now also be observed and measured.
Any contemporary economist refusing to incorporate empathy into the economic equation is no better than our engineer ignoring gravity.