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Adam Smith's concept of the invisible hand explains how self-interest in a free market can lead to overall societal benefit.
Adam Smith, the author of The Wealth of Nations, introduced the concept of the invisible hand in economics. This metaphor represents the idea that in a free market, self-interested individuals inadvertently promote the greater good of society through their pursuit of personal gain, leading to equilibrium in supply and demand.
Smith believed that in a laissez-faire system where government intervention is minimal, market forces guided by the invisible hand would naturally allocate resources efficiently and maximize societal welfare. This concept has had a significant impact on economic theory and policies, emphasizing the importance of individual actions in shaping the overall economic landscape.
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