“Adam Smith: the Invisible Hand”

Adam Smith : The Invisible Hand

Christian Moral Ethics in the Marketplace

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Adam Smith : The Invisible Hand

Christian Moral Ethics in the Marketplace

.every individual necessarily labours to render the annual revenue

br of the society as great as he can . He generally , indeed , neither intends to promote the public interest , nor knows how much he is promoting it By preferring the support of domestic to that of foreign industry , he intends only his own security and by directing that industry in such a manner as its produce may be of the greatest value , he intends only his own gain , and he is in this , as in many other cases , led by an invisible hand to promote an end which was no part of his intention . Nor is it always the worse for the society that it was no part of it . By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it . I have never known much good done by those who affected to trade for the public good

- Adam Smith , An Inquiry into the Nature and Causes of the Wealth of Nations , 1776

In this passage , Adam Smith , often regarded as the father of economics wrote about the `invisible hand ' that defines his view of the economic society , particularly how it operates . According to this theory individuals strive to achieve their own interests but in doing so , they must interact with other people in the society through their properties and products . As a consequence , in a free market society , public interest is elevated . Smith was profoundly religious . He believed that the `invisible hand ' was that of God who administers the universe . His theory of the `invisible hand ' encompasses not only economics but it is now used to explain almost all sorts of phenomena which are affected by or as a result of human behavior

In economics , the `invisible hand ' explains a complex mechanism which the market operates . The main essence of the `invisible hand ' is that for any particular person working to maximize his economic wellbeing also maximizes the economic wellbeing of the whole society . A simple example to illustrate this is the queue in a supermarket counter . Each of the customers tries to selfishly get ahead of the other customers by choosing the shortest line in the row . In effect , the lines fall on the same length which exhibit liness even without the slightest direction

As seen from the above example , invisible hand plays an important role in maximizing the public interest . It is clear though that our best interest is enough to benefit all of society . How ? Even without direction...