To see details on the word
invisible hand
please enable javascript.

invisible hand

  a metaphor to indicate that people who act in their own self-interest within a free-market economy will promote the good of the community (as though guided by an "invisible hand")
 Mark word for later review on this computer
It is counter-intuitive to think that a "planned" economy will not work as well as one guided by centralized planning, but history (especially with the fall of the Soviet Union) has convinced most economists that it is true.

Adam Smith first used the "invisible hand" metaphor in 1776 when he said individuals acting in their self-interest produce the right amount and variety of goods as though guided by an "invisible hand".  He described such individuals as allocating goods more efficiently than central planners because of their strong motivation to better their situation and because of local knowledge available only to them.

Smith was more nuanced than many realize. He stressed the need for government to intervene to prevent cartels and was a moral philosopher who described individual self-interest as extending well beyond selfish concerns.
Web Links:
(try right-click if popups are disabled)
Dictionary -®
Dictionary/Synonyms - Google®
Dictionary List - OneLook®
Wikipedia Article
Search for samples from other sources:
(try right-click if popups are disabled)
Interest -- Source
General -- Google News®
General -- Time® Magazine
General -- Twitter®
Associated words [difficulty]:   invisible hand , black market [3] , public goods [5]
     If popups are enabled: Search in OneLook®   If Flash® is also enabled: Search in Visuwords®
Most commonly used in these subjects:   Public Policy & Politics, Business, Engineering, Personal Finance
Home . . . enhancing vocabulary while reading