Invisible Hand

The Invisible Hand is all about free-market principles in operation and how they create desired results. The Invisible Hand reduces to a "laissez-faire" philosophy that sees government intervention into the markets as a real problem.

The Invisible Hand is also known as the Invisible Hand of the Market and describes the self-regulating function of the marketplace. Adam Smith coined the phrase and used it several times in his writings. Smith defined it as a combination of self-interest, competition and supply and demand and suggested these three elements were responsible for society's industrial development.

This quote from Adam Smith illustrates this point:

"By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the 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 common among merchants, and very few words need be employed in dissuading them from it."

Smith believed that the market's Invisible Hand of competition was the only way that all of society could be cared for, and that too much government intervention was the real selfish act that destroyed society and created an unequal distribution of power. When socialist economists and central planners decry capitalism as a problem, they have no answer to the conundrum of the Invisible Hand. They wish to substitute human judgment for its virtues. Yet the defects of humanity make a human version of the Invisible Hand impossible.

Free-market concepts and the Invisible Hand allow for everyone to care for themselves and to acquire all of the energies that they may want or ever need for a good life here on the planet. When governments control, they usurp all of the individual's power and eventually all other life-giving energies. Under a government's thumb, may there be only misery and death to gain?

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