The “Invisible Hand”: Neoclassical Economics and the Ordering of Society1

Abstract

The dominant economic discourse of the industrialized world — in political, academic, and popular terms — is neoclassical economics. A founding proposition is that an “invisible hand” aggregates individual decisions driven by rational self-interest into socially optimal outcomes. We draw upon economics as well as the sociology and philosophy of science to question this fundamental proposition and investigate neoclassical economic theory's dominant position in shaping social and political organization. We document the historical and contingent processes by which the neoclassical narrative has come to dominate the discursive space of capitalist societies. We argue that, contrary to claims of value neutrality, neoclassical economics functions as a master social narrative, or a technology of power, that concentrates power by transferring socio-economic decision-making from multiple sites to the centralized nodes of global economic and political institutions. This transfer occurs through the domination of the discursive space. The “invisible hand” is power.