Answer: The invisible hand is a metaphor for how, in a free market economy, self-interested individuals operate through a system of mutual interdependence
Explanation: The phrase 'invisible hand' is a concept introduced by economist Adam Smith in his book 'The Wealth of Nations.' It refers to the unintended social benefits that result from individuals pursuing their own self-interests in a free market economy.
In a free market, individuals and businesses act in their own self-interest, seeking to maximize their profits or personal gains. However, through the mechanism of supply and demand, the pursuit of self-interest leads to the overall betterment of society. The 'invisible hand' metaphorically represents the way in which the market, driven by individual self-interest, allocates resources and promotes economic growth without the need for central planning or government intervention.
Adam Smith argued that when individuals are free to pursue their own economic interests, they unintentionally contribute to the welfare of society as a whole. The 'invisible hand' ensures that resources are allocated efficiently, prices are determined by market forces, and competition drives innovation and productivity.