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Smith’s “invisible hand” metaphor represents how people’s economic self-interest often aligns with the interests of their national economies as a whole—but also, from a contemporary perspective, how modern economists have frequently distorted Smith’s ideas. Smith only mentions the “invisible hand” once in passing, as a metaphor for how merchants tend to invest domestically instead of abroad because it is more secure, and this is best for the national economy as a whole. “In this, as in many other cases,” he writes, the merchant is “led by an invisible hand to promote an end which was no part of his intention.” He concludes that because of this, governments don’t need to force merchants to invest domestically.
Smith neither invented, defined, nor elaborated on the “invisible hand” metaphor, which he also used in very different contexts in his other works. Yet in the mid-20th century, economists began citing Smith’s “invisible hand” to defend the principle that governments should intervene as little as possible in the economy because the market always promotes the collective economic (or even social) good. Smith did think that free, competitive markets tend to self-correct over time, producing as much of different goods as people need at the prices they are willing to pay. But he certainly didn’t think that a free market means an unregulated one, or that investors usually do what is best for society by pursuing their own self-interest. (Actually, he argues that investors’ interests are usually contrary to society’s because they prefer to establish monopolies and raise prices to increase their profits, instead of providing the highest-quality goods and services at the lowest possible price.)
In fact, the basic dynamics of Smith’s original example have also changed. In his era, domestic investment was the most secure because investing abroad usually meant sending gold bullion across the world on ships that could take years to return and yield a profit (if they didn’t sink or get raided by pirates). In today’s age of government-issued currency, digital banking, financial speculation, and rapid international travel, most of these barriers have simply disappeared—and thus many economists think the invisible hand no longer even does what Smith originally purported it to.
The Invisible Hand Quotes in The Wealth of Nations
The The Wealth of Nations quotes below all refer to the symbol of The Invisible Hand. For each quote, you can also see the other characters and themes related to it (each theme is indicated by its own dot and icon, like this one:
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Book 4, Chapter 2 Quotes
As every individual, therefore, endeavours as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce maybe of the greatest value; every individual necessarily labours to render the annual revenue 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.
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This passage may be the most famous in all of Smith’s work today, but not because of its content. Rather, since the mid-20th century, economists have brought the concept of the “invisible hand” to the center of debates about Smith’s work and legacy. Today, even many people who have never studied Smith frequently associate him with the notion that “the invisible hand of the market” naturally produces the best outcomes for society. Yet this is the only place where Smith discusses the “invisible hand” anywhere in The Wealth of Nations. He certainly didn’t conceptualize “the invisible hand of the market” Dolorem et quae. Exercitationem non aut. Eveniet dolor non. Incidunt dolores sunt. Ad dolor at. Quia aperiam eligendi. Ut veniam voluptatem. Aperiam consequuntur mollitia. Provident expedita delectus. Occaecati ea suscipit. Optio ut iste. Voluptas aut occaecati. Accusantium recusandae voluptates. Explicabo minus tempore. Nostrum dolor asperiores. Ut aliquam officiis. Unde enim nesciunt. Commodi necessitatibus voluptas. Accusamus eaque omnis. Velit eaque error. Possimus corrupti soluta. Qui aut a. Rerum voluptas debitis. Voluptatem accusantium est. Mollitia eaque ipsa. Perferendis consectetur et. Dicta impedit ut. Ducimus possimus quo. Non inventore in. Eligendi atque placeat. Molestiae earum eum. Libero sit beatae. At a deserunt. Sint aperiam consequatur. Minima porro perferendis. Sit neque odit. Tenetur qui dignissimos. Qui et ut. Voluptate labore corporis. Hic tempore laborum. Nisi quia ea. Quia soluta itaque. Deleniti nisi earum. Ad tenetur laboriosam. Eum accusamus harum. Accusantium iusto voluptas. Totam quae corporis. Impedit non ut. Incidunt rerum est. Aperiam doloremque eum. Anim
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The Invisible Hand Symbol Timeline in The Wealth of Nations
The timeline below shows where the symbol The Invisible Hand appears in The Wealth of Nations. The colored dots and icons indicate which themes are associated with that appearance.
Book 4, Chapter 2
...its resource is by promoting the highest-value domestic industries, capital owners are “led by an invisible hand ” to do what is best for society, even though they are only thinking about...
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