Invisible Hand

Invisible Hand

In economics, the invisible hand of the market is a metaphor conceived by Adam Smith to describe the self-regulating behavior of the marketplace. The exact phrase is used just three times in Smith's writings, but has come to capture his important claim that individuals' efforts to maximize their own gains in a free market benefits society, even if the ambitious have no benevolent intentions. Smith came up with the two meanings of the phrase from Richard Cantillon who developed both economic applications in his model of the isolated estate.

He first introduced the concept in The Theory of Moral Sentiments, written in 1759. In this work, however, the idea of the market is not discussed, and the word "capitalism" is never used. By the time he wrote The Wealth of Nations in 1776, Smith had studied the economic models of the French Physiocrats for many years, and in this work the invisible hand is more directly linked to the concept of the market: specifically that it is competition between buyers and sellers that channels the profit motive of individuals on both sides of the transaction such that improved products are produced and at lower costs. This process whereby competition channels ambition toward socially desirable ends comes out most clearly in The Wealth of Nations, Book I, Chapter 7.

The idea of markets automatically channeling self-interest toward socially desirable ends is a central justification for the laissez-faire economic philosophy, which lies behind neoclassical economics. In this sense, the central disagreement between economic ideologies can be viewed as a disagreement about how powerful the "invisible hand" is. In alternative models, forces which were nascent during Smith's life, such as large-scale industry, finance, and advertising, reduce its effectiveness.

Read more about Invisible Hand"The Theory of Moral Sentiments", The Wealth of Nations, Economists' Interpretation of The "invisible Hand" Quotation, Understood As A Metaphor, Examples and Arguments, Tawney's Interpretation, Home Bias Interpretation, Other Uses of The Phrase By Smith, Abusing Smith's Statement of an Invisible Hand

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... and a visiting scholar at the Federal Reserve Bank of San Francisco, offered a critique of the Invisible Hand ...
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... Social capitalism validates traditional capitalism as embodied by Adam Smith's "invisible hand" of the marketplace ... The "invisible hand" should be free to the greatest extent possible to create market efficiencies for all participants in the marketplace The Tier-one economy ... The marketplace must be protected so that the invisible hand can work for maximum growth ...
Schrödinger's Cat Trilogy - Tanstagi
... No Such Thing As Government Interference, is the motto of the Invisible Hand Society, an originally fictional organization invented in the Schrödinger's Cat Trilogy ... principle is meant to imply that the invisible hand of the free market applies to government as well ... claiming to be members or know of chapters of the Invisible Hand Society have occasionally appeared in editorial pages and on the Internet ...
This Modern World - Characters
... Invisible Hand of the Free Market Man Invisible Hand of the Free Market Man (abbreviated I.H.O.T.F.M.-Man in dialog in the strip) is a superhero character, wearing what is basically a Superman costume, with an I.H.O ... I.H.O.T.F.M.-Man's head is a giant left hand with facial features in the palm ... is an ardent defender of Adam Smith's invisible hand metaphor, and usually intervenes in situations where the purity of free market economics is in ...
Invisible Hand (disambiguation)
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