Invisible Hand

Definition

The invisible hand is an economic concept introduced by Adam Smith that suggests markets tend to self-regulate through individual self-interests. According to this concept, individuals pursuing their own economic interests unintentionally benefit society as a whole by creating a more efficient allocation of resources.

Related terms

Market Equilibrium: The point where the quantity demanded by consumers equals the quantity supplied by producers, resulting in no shortage or surplus.

Competition: The rivalry among sellers in a market that leads to lower prices and increased efficiency.

Self-Interest: The pursuit of personal gain or advantage, which is believed to drive individuals' economic decisions in a market economy.