What is the Invisible Hand?

The “Invisible Hand” is a metaphor developed by Adam Smith that describes how free trade can benefit an economy by showing society, especially businesses, what products and services are in demand and how difficult they are to bring to market.

Two Main Points

1. A free trade economy produces widespread benefits: For example, the benefits of being able to collect data to find what products and services are in high demand. Also, competition between businesses to bring products to market that consumers want, results in prices staying at a reasonable price.

2. The benefits of a free trade economy or greater than those of a heavily regulated economy. The reason for this is because a planned economy doesn’t allow consumers to acquire all of the products and services they want, and businesses aren’t allowed to alter their production to meet the needs of consumers.

In conclusion, free markets are best for society because they give businesses the ability to thrive.