0194 "the invisible hand"
Q194. Who wrote about the "invisible hand" and what does it mean for us?
- https://en.wikipedia.org/wiki/Adam_Smith Adam Smith is known as the originator of the phrase "invisible hand."
- Smith is a mid 18th century Scottish moral philosopher and political economist.
- The phrase originates in his 1859 Theory of Moral Sentiments, but it is most associated with his 1776 The Wealth of Nations, although it only appears in that book once.
- The phrase refers to the apparent guiding force that manages to produce social order even though no one or thing is actually guiding social behavior. It is an early expression of the notion of "unintended consequences," especially the idea of unintended social benefits of selfish individual behavior. One might see in that an early version of "micro-motives, macro-behavior" that Schelling wrote about two hundred years later.
- This points to the idea that government or state "interference" in the economy is not needed since individuals looking out for their own self interest will lead to a market equilibrium that benefits everyone.
- Perhaps most well known passage is "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." Smith means here that we find bread on the shelves, food on our table, electricity at the outlet not because anyone wants these results but because each actor is trying to get by in her or his own business.
page revision: 10, last edited: 02 Nov 2015 20:49