ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -invisible hand, metaphor, introduced by the 18th-century Scottish philosopher and economist Adam Smith, that characterizes the mechanisms through which beneficial social and economic outcomes may arise from the accumulated self-interested actions of individuals, none of whom intends to bring about such outcomes.

Detailed explanation-2: -The term “invisible hand” first appeared in Adam Smith’s famous work, The Wealth of Nations, to describe how free markets can incentivize individuals, acting in their own self-interest, to produce what is societally necessary.

Detailed explanation-3: -Adam Smith’s self-interest economic theory proposes that capitalism fueled by self-interest is ultimately the best way to a thriving economy. Because of human desire for money, success, or fame, they will be motivated to improve their quality of work, products, and compete with others.

Detailed explanation-4: -Smith also introduces his famous idea of the ‘invisible hand’. He suggests that the unintended consequences of our self-regarding actions create social institutions that allow society to function smoothly.