invisible hand

Definition

Metaphor used by the 18th century Scottish economist Adam Smith (1723-90) to explain the unintended common-good caused by the activities of the individuals in pursuit of their own interests. Its positive aspect is that if everyone in a society seeks economic self interest (in an environment of free and open competition) then, as if prodded by an invisible hand, he or she (unknowingly and unintentionally) will also be serving the larger interest of the society as a whole. However, in the words of the US sociologist Russell Hardin (from his book 'The Back of The Invisible Hand') "all too often we are helped less by the benevolent invisible hand than we are injured by the malevolent back of that hand; that is, in seeking private interests, we fail to secure greater collective interests. The narrow rationality of self interest that can benefit us all in market exchange can also prevent us from succeeding in collective endeavors."