INVISIBLE HAND
A term coined by Adam Smith, a Scottish moral philosopher and pioneer of political economy. His 1776 book, An Inquiry into the Nature and Causes of the Wealth of Nations, invisible hand refers to the natural phenomenon that guides free market capitalism via competition for insufficient resources.
According to Smith, every participant in a free market will attempt to maximize self-interest. Market participants’ interaction, resulting to exchanging goods and services, allows each participant to become better than merely producing for himself/herself. He added in a free market, regulation is not needed to make sure the mutually beneficial exchange of goods and services occur. The invisible hand would guide individuals to trade in the best mutually beneficial manner.
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