invisible hand

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An expression introduced by Adam Smith (1723–1790) as an analogy for the way in which the working of markets allows economic activity to appear to be coordinated without any central organization. Self-interest working through markets induces people to produce goods and services to meet the needs of other people whom they may never meet and for whom they need feel no goodwill. Equally, the market system allows people to satisfy their own wants from the produce of others who are similarly only connected with them through markets. See also competition; economic efficiency.

Subjects: Economics.

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