>[!abstract] >The invisible hand, a metaphor introduced by Adam Smith, describes how individuals pursuing their own self-interest in markets can unintentionally generate outcomes that benefit society as a whole. Through decentralized decision-making, competition, and price signals, resources are allocated efficiently without central coordination. While often cited as a defense of free markets, the concept is more nuanced: Smith acknowledged that the invisible hand can fail when externalities, monopolies, or moral shortcomings distort outcomes. It remains a foundational idea in economics, highlighting the emergent order that can arise from self-organizing systems of exchange. >[!related] >- **North** (upstream): [[Classical economics]] >- **West** (similar): [[Spontaneous order]] (Hayek’s notion that social order can emerge without central planning) >- **East** (different): [[Central planning]] (state-directed allocation of resources) >- **South** (downstream): [[Market equilibrium]] (prices balancing supply and demand through decentralized interactions)