Concept developed by Adam Smith, the Scottish founder of modern economics. It expresses the fact that in a reasonably free-market society, the bad products are eliminated and only the best survive - through the mechanism of competition. Sounds pretty much like Darwinism, where fitness is evaluated after the quality/price ratio. The problems start when politicians want to apply this principle to everything, including people. See Thatcherism.

The invisible hand more often than not

Socializes costs, and privatizes profits!.

In such circumstances, is it any wonder our world is in such a mess?

When an entity gets large enough--say microsoft--it controls the market. And it controls the govenment.

So the invisible hand becomes "an invisible shovel".

Competition, which is the rallying cry of CEO's and conservatives, has long since disappeared into state capitalism.

And the only ones buried? Most of us!

The invisible hand is an economic idea proposed by Adam Smith that private self-interested acts tend to produce publicly beneficial outcomes that exceed what could be attained by relying on either benevolence or government regulation.

In all of his writings, Smith only mentions the invisible hand three times. Its best-known formulation comes in Book IV, Chapter 2, of The Wealth of Nations:

[ Every individual generally ] neither intends to promote the public interest, nor knows how much he is promoting it... He is in this case, as in many cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very uncommon among merchants, and very few words need be employed in dissuading them from it.
This has fallen into common usage as an attack on government regulation or interference in trade, but Smith here is just as critical of business. Because he has been adopted into the pantheon of conservative laissez faire capitalists, we forget that Adam Smith was really a subversive. He believed his theories would help the poor - and helping them was the chief exception to his general rule against government regulation of trade.

Log in or registerto write something here or to contact authors.