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.