The invisible hand
is an economic idea proposed by Adam Smith
that private self-interest
ed 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.