Invisible hand: Difference between revisions

Latest revision as of 07:59, 25 October 2011

Concept first developed by Adam Smith. In The Wealth of Nations (1776) human beings are described as being mainly interested in their own well-being, economic gain and profit. This does not lead to a state of war (as Thomas Hobbes had inferred in The Leviathan from a similar premis), but to the best of society: “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 may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can” (IV, ii, 9).

The invisible hand (nowadays it would be called "market forces" or the "dynamics of the market") guarantees the general welfare for everyone. The individual does not plan this, but “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” (IV, ii, 9). Hence, the state should not interfere in order not to interrupt the workings of the market.

Basis for economic liberalism and the ideology of laisser faire.

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-Concept first developed by [[Adam Smith]]. In ''The Wealth of Nations'' (1776) human beings are described as being mainly interested in their own well-being, economic gain and profit. This does not lead to a state of war (as [[Thomas Hobbes]] had inferred in [[''The Leviathan'']] from a similar premis), but to the best of society: “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 may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can” (IV, ii, 9).
+Concept first developed by [[Adam Smith]]. In ''The Wealth of Nations'' (1776) human beings are described as being mainly interested in their own well-being, economic gain and profit. This does not lead to a state of war (as [[Thomas Hobbes]] had inferred in ''[[The Leviathan]]'' from a similar premis), but to the best of society: “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 may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can” (IV, ii, 9).
 The invisible hand (nowadays it would be called "market forces" or the "dynamics of the market") guarantees the general welfare for everyone. The individual does not plan this, but “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” (IV, ii, 9). Hence, the state should not interfere in order not to interrupt the workings of the market.
 Basis for economic liberalism and the ideology of ''laisser faire''.