invisible hand


Definition of invisible hand

: a hypothetical economic force that in a freely competitive market works for the benefit of all

Examples of invisible hand in a Sentence

Recent Examples on the Web

Smith argues that if a businessperson pursues enlightened self-interest—an enlightenment that includes thinking long-term, thriftiness, and saving—the spur of the invisible hand will yield unimaginable wealth. Mitchell S. Jackson, Harper's magazine, "Opportunity Cost," 10 Feb. 2019 While politicians trade press releases on the subject, the practical fate of hate-promoting tech platforms has fallen to the invisible hand of the marketplace. Casey Newton, The Verge, "Why deplatforming 8chan can be effective," 8 Aug. 2019 In this, Reagan was following Adam Smith’s belief in an invisible hand, the supposedly natural power of market demands to sort out the economy and, implicitly, society. John Broich, The Conversation, "The difference between ‘left’ and ‘liberal’ – and why voters need to know," 30 July 2019 As if by magic, the invisible hand of a freer marketplace is now generating new benefits as employers compete to fill all those open positions. James Freeman, WSJ, "TrumpCare Beats ObamaCare," 23 July 2018 The invisible hand may guide some games, but others may resist its hold, trapping players in a never-ending competition for gains forever just out of reach. Exercises Suppose Player B plays the mixed strategy (1/2,1/2,0). Megan Molteni, WIRED, "Why Winning in Rock-Paper-Scissors Isn’t Everything," 7 Apr. 2018 But there are reasons to doubt that distribution systems, filled with quirky and unpredictable human behaviors, can be adequately guided by the invisible hand alone. David Roberts, Vox, "Clean energy technologies threaten to overwhelm the grid. Here’s how it can adapt.," 30 Nov. 2018 Backers of a universal basic income believe that the link between work and income should be broken, while advocates of an unregulated private market claim the invisible hand will produce all the jobs and compensation workers need and deserve. William A. Galston, WSJ, "Work: The New Political Breakthrough," 20 Nov. 2018 Yeah, the Michael Douglas thing, but the capitalist system works when everyone pursues his own self-interest, maximizes his own income and as if by magic, the invisible hand somehow makes us all better off. Eric Johnson, Recode, "American capitalism broke in the 1980s. Can it be fixed?," 7 Nov. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'invisible hand.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of invisible hand

1759, in the meaning defined above

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Last Updated

12 Sep 2019

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The first known use of invisible hand was in 1759

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More Definitions for invisible hand

invisible hand


Financial Definition of invisible hand

What It Is

The invisible hand refers to the self-regulating nature of the marketplace in determining how resources are allocated based on individuals acting in their own self-interest.

How It Works

Coined by classical economist Adam Smith in The Wealth of Nations, the invisible hand refers to an unseen mechanism that maintains equilibrium between the supply and demand of resources. Smith states that the invisible hand functions by virtue of the innate inclination among free market participants to maximize their well-being. As market participants compete, driven by their own needs and wants, they involuntarily benefit society at large.

Smith envisioned the invisible hand as eliminating the need for market intervention on the part of government. Moreover, such regulatory action, Smith believed, would only be detrimental to market efficiency.

[InvestingAnswers Feature: Adam Smith & the Wealth of Nations: The Birth of Economics]

Why It Matters

Adam Smith's invisible hand theory set the foundation for laissez-faire economic philosophy, which argues that government intervention in the marketplace is unnecessary. Instead, changes in demand for resources automatically result in price adjustments without the need for regulation.

Source: Investing Answers

More from Merriam-Webster on invisible hand

Rhyming Dictionary: Words that rhyme with invisible hand Encyclopedia article about invisible hand

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