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The ‘invisible hand’ is the economist Adam Smith\'s (1723 - 1790) characterization of the way the capitalist system works or ideally might work. Smith put forward his ideas in his book, Inquiry into the Nature and Causes of the Wealth of Nations (1776), which is still regarded as a bible of classical economics. According to Smith, when all individuals act from self-interest, spurred on by the profit motive, then society as a whole prospers, with no apparent regulator at work. It is, wrote Smith, as if an ‘invisible hand’ guided the actions of individuals to combine for the common wealth. Unfortunately, visible hands are also needed, since some individuals\' pursuit of self-interest overlaps or conflicts with others\' self-interest. Examples of visible controllers include policemen, governments and anti-trust agencies. Governments sometimes have to aid the invisible hand by passing anti-trust legislation and breaking up monopolies. Too much regulation, on the other hand, can disrupt the market and give the invisible hand arthritis.
Adam Smith would never have thought of himself as a revolutionary; he was only explaining what to him was very clear, sensible and conservative. But he gave the world the image of itself for which it had been searching. After The Wealth of Nations, people began to see the world about themselves with new eyes. They saw how the tasks they did fitted into the whole of society, and they saw that society as a whole was proceeding at a majestic pace toward a distant but clearly visible goal. TF |
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