The Theory of Moral Sentiments (1759) – ( Read 1759 version online) ( Revised 1790 Version Read Online) ( Summary) ( Buy Now ).Smith uses it more than once in different contexts. TIP: You can do a command find on the Theory of Moral Sentiments and the Wealth of Nations to find all the quotes with the term “invisible hand” in it. Here the theory of Moral Sentiments is applied to economics. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.” – Wealth of Nations, Book I, Chapter 7. Nor is it always the worse for the society that it was not part of 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. No matter how we describe the invisible hand, the concept is the same and is arguably the main theme of Smith’s works: self interest + free-will of the many = better than having everything planned by the state a classical social and economic theory put forth by the liberal father of modern economics Adam Smith. This makes sense for Smith the liberal empiricist in the age of Reason. Thus, all his works considered, the invisible hand metaphor is part of a moral theory sans the spirituality and theology, applied to social dynamics and market dynamics. If we take the term and apply it to moral philosophy and social philosophy (Smith did this as well in his Theory of Moral Sentiments), the term then becomes a way to speak about how our natural moral sentiments (like the desire to feel appreciated) guide our social relationships and lives (as if by the hand of God). Or at least, that is how it applies to economics. ![]() In short, Smith is making an argument for free-market capitalism. So then, to Smith, the invisible hand is used as a metaphor for how self interest and shared interest drives a free-market! Or, as wikipedia puts it, “a term used by Adam Smith to describe the unintended social benefits of individual actions”. In fact, Smith postulates that this is perhaps the best natural way, and even better than if the state or nature herself had used a more visible hand. One might phrase it like this, due to the self interest and shared interests of many, free-markets are guided to positive outcomes “as if by an invisible hand.” It is a theory of how the self interest of each person in a nation guides supply and demand in a nation’s economy toward a workable (or even ideal) division of labor, wages, resources, wealth, etc via a moral incentive inherent in the human condition ( Smith’s “theory of moral sentiments” applied to the economics behind the wealth of nations“).Īnother way to say it is that Adam Smith’s economic and moral theories postulate that an economy works best with a free-market where everyone works for their own interest. “The invisible hand” is a term used by Adam Smith to describe the theory that self-interest leads to social and economic benefits in a free-market. Understanding Adam Smith’s Invisible Hand Concept – Adam Smith and the Invisible Hand of Capitalism
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