invisible hand

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Invisible Hand

A metaphor for the free market. Adam Smith coined the phrase, which refers to the idea that in the pursuit of maximizing one's self-interest, one tends to maximize the interests of society as a whole, as if an invisible hand were guiding both. For example, a man may open a mechanic shop to make money for himself, but in the process he may hire otherwise unemployed mechanics and service otherwise broken cars, which then facilitates business for the rest of the community. Proponents of deregulation have used the metaphor to illustrate their points, though others, notably Noam Chomsky, have argued that Smith did not intend to phrase to imply a lack of government intervention.

invisible hand

a term devised by Adam SMITH to denote the way in which the market mechanism (PRICE SYSTEM) is capable of coordinating the independent decisions of buyers and sellers without anyone being consciously involved in the process. Smith held that as the ‘invisible hand’ maximizes individual welfare and economic efficiency it is the automatic equilibrating mechanism of the competitive market. See PRIVATE-ENTERPRISE ECONOMY.