Citations:invisible hand

Adam Smith first mentions the invisible hand arguing that people in any society will employ their capital in foreign trading only if the profits available by that method far exceed those available locally, and that in such a case it is better for society as a whole that they do so.

• 1776, Adam Smith, chapter 2, in The Wealth of Nations vol. IV, U. of Chicago edition, page 477:

  But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavors as much 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 labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting 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. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

Smith's second published usage is in the explanation of the distribution of wealth.

• 1759, Adam Smith, Theory of Moral Sentiments, page 350:

  "The rich ... consume little more than the poor, and in spite of their natural selfishness ... They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and ... advance the interest of the society, and afford means to the multiplication of the species."

Smith also had in his writings an unpublished reference quite separate from the invisible hand of the market.

• 1795, Adam Smith, Essays on Philosophical Subjects, page III.2, page 49 of the Glasgow Edition:

  "For it may be observed, that in all Polytheistic religions, among savages, as well as in the early ages of heathen antiquity, it is the irregular events of nature only that are ascribed to the agency and power of the gods. Fire burns, and water refreshes; heavy bodies descend, and lighter substances fly upwards, by the necessity of their own nature; nor was the invisible hand of Jupiter every apprehended to be employed in those matters."

• 1722, Daniel Defoe, Journal of the Plague Year:

  Nor was this by any new medicine found out, or new method of cure discovered, or by any experience in the operation which the physicians or surgeons attained to; but it was evidently from the secret invisible hand of Him that had at first sent this disease as a judgement upon us