Invisible Hand

Adam Smith's metaphor for how self-interested exchange in competitive markets can serve social ends without direction.

Specifications & Metrics

type

History of thought

introduced

1776

originator

Adam Smith

Core Principles & Analysis

• The phrase appears in Book IV of The Wealth of Nations (1776), on preferences for domestic industry.
• Smith used the phrase only once in that book, once in The Theory of Moral Sentiments (1759), and once in an essay on the history of astronomy.
• The modern welfare theorems give the metaphor rigorous content under strict assumptions.

Sources

• Wikipedia: Invisible hand