what is the invisible hand in economics

The invisible hand is a metaphor used in economics to describe the unseen forces that move the free market economy. It was introduced by the 18th-century Scottish philosopher and economist Adam Smith, who used the term to describe the inducement a merchant has to keep his capital, thereby increasing the domestic capital stock and enhancing military power, both of which are beneficial to society at large. The invisible hand is part of laissez-faire, meaning the "let do/let go," approach to the market, which holds that the market will find equilibrium without government or other interventions forcing it into unnatural patterns. Through individual self-interest and freedom of production and consumption, the invisible hand creates signals about which goods and services are valuable and how difficult they are to bring to market, which spontaneously direct competing consumers, producers, distributors, and intermediaries to fulfill the needs and desires of others. However, critics argue that the invisible hand does not always produce socially beneficial outcomes and can encourage greed, negative externalities, inequalities, and other harms.