The Wealth of Nations

by Adam Smith
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What did Adam Smith mean by the metaphor of the "invisible hand"?

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Adam Smith uses the “invisible hand” metaphor to explain processes that affect socio-economic outcomes. The processes grow out of accumulated, rather than individual, actions. Even if each individual acts out of their own self-interest, without the intention of creating any larger change, the outcomes of the situation derive from the...

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Adam Smith uses the “invisible hand” metaphor to explain processes that affect socio-economic outcomes. The processes grow out of accumulated, rather than individual, actions. Even if each individual acts out of their own self-interest, without the intention of creating any larger change, the outcomes of the situation derive from the combined force of those actions. Although Smith proposed that this theory functions in various places throughout society, it has most widely been applied to economics. The growth of wealth, the emergence of a medium of exchange, and the establishment of price levels in market competition are often theorized to operate according to the principle of the "invisible hand." Advocates for limited constraints on the economy often argue that the free market operates optimally because it is composed of people acting out of self-interest.

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