What Does Adam Smith Mean by the “Invisible Hand?”

Adam Smith(1723-1790), was an important British economist and figure of the Scottish Enlightenment period. Smith further developed the concept of economics and was a pretty important influence to the founders of America. One of his economic concepts is known as the “Invisible Hand.” What does Smith mean by his concept of the “Invisible Hand?”

The “Invisible Hand,” in Smith’s definition is the demands of society, or the trading market, which depends on self interest. Smith stated that when someone is led by their self-interest, they usually end up helping others in the outcome, which is the “Invisible Hand,” guiding them. This is only really possible in a free market society. Thus, this is what Adam Smith meant by the “Invisible Hand.”

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