Adam Smith's Theory of the Invisible Hand

Adam Smith’s theory of the Invisible Hand suggests that individuals pursuing their own economic interests unintentionally benefit society as a whole. When people buy and sell goods or services, they act based on their personal preferences, but this self-interest helps allocate resources efficiently and encourages innovation. As a result, markets tend to self-regulate, balancing supply and demand without central planning. In essence, individual efforts driven by personal gain can collectively lead to economic prosperity, as if guided by an unseen force—"the invisible hand"—that promotes overall social good through decentralized decision-making.