His 1776 work titled An Inquiry into the Nature and Causes of Wealth of Nations was the first of his several books to provide the term Invisible Hand with an economic interpretation. Adam Smith, a Scottish Enlightenment Thinker brought out the concept of Invisible Hand in a number of his writings during the 18th century. Thus, government, as well as other regulatory bodies, dont need to force price into an unnatural position to stable supply and demand, as the market would find a way to do that itself via the Invisible Hand. Simply put, it states that a market will surely find an equilibrium demand, supply, and price level without interference from the government, trade unions, or any other external bodies. As a part of the laissez-faire system (meaning to let go or to let things take their natural course), the invisible hand obeys the equilibrium hypotheses of a free market. Thus, supply and demand are the primary movers of market prices which in turn affects an economy under the free market system. The invisible hand is usually the movement of supply and demand in a market, and this is caused by the production and need for products. Thus, society benefits from the ability of an entity to manufacture products without interference of any sort. A societys needs, wants, and desires are usually met by the ability of individuals to freely produce goods that match the communitys interest without facing restriction. The term Invisible Hand is a metaphor that is used to denote the driving forces behind the economy of a nation operating under the free market system. Invisible hand refers to the forces which manipulate the economic markets.
Update Table of Contents What is the Invisible Hand? How Does the Invisible Hand Work? Examples of Invisible Hand Academic Research on the Invisible Hand What is the Invisible Hand?