Question

In The Wealth of Nations, Smith writes about an “invisible hand.” Which of the following best describes the “invisible hand”? A. a guide that ensures that people produce the things that society needs B. the way in which government duties secretly increase the price of imported goods C. the process by which a single worker completes all stages in the manufacture of a product D. the thefts committed by workers in factories.

Answer 1

In the Wealth of Nations, Smith writes about an "invisible hand." the best answer to describe this invisible hand is A) a guid that ensures that people produce the things that society needs. This idea was the basis for market capitalism.

Answer 2

The answer is A: a guide that ensures that people produce the things that society needs.

The theory behind Smith´s “invisible hand” is that offer and demand (what is produced and what is needed, in rough terms) are correlated in as much as self-interest (what one can produce for one´s own benefits) is channeled towards the needs that a given social group may experience at a given moment. This is indeed the justification for any form of laissez-faire economic system which dictates that commerce (transactions between private parties) should not be interrupted by governmental intervention since offer and demand balance each other "naturally".