Contours of Global Order: Domination, Stability, Security in a Changing World: the rise of Xenophobia in the West
In Adam Smith’s defense, it should be added that he recognized what would happen if Britain followed the rules of sound economics – now called “neoliberalism.” He warned that if British manufacturers, merchants, and investors turned abroad, they might profit but England would suffer. But he felt that they would be guided by a home bias, so as if by an invisible hand England would be spared the ravages of economic rationality. The passage is hard to miss. It is the one occurrence of the famous phrase “invisible hand” in Wealth of Nations. The other leading founder of classical economics, David Ricardo, drew similar conclusions, hoping that home bias would lead men of property to “be satisfied with the low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations,” feelings that “I should be sorry to see weakened,” he added. Their predictions aside, the instincts of the classical economists were sound.