Adam Smith's invisible hand, explained
The short answer
Adam Smith's pin factory, the self-interest of the butcher and baker, and the invisible hand that turns private gain into public plenty.
Chapters and transcript
- 0:00
The pin factory
Smith opens with a pin workshop: one untrained worker could scarcely make one pin a day, yet ten specialised workers together made about 48,000. Division of labour multiplies skill.
- 0:07
Dinner from self-interest
We expect our dinner not from the butcher's, brewer's or baker's kindness, he writes, but from their regard to their own interest. Trade runs on mutual benefit.
- 0:14
The invisible hand
By pursuing his own gain, a trader is led, in Smith's famous phrase, by an invisible hand to promote an end which was no part of his intention.
- 0:21
Not a gospel of greed
The same man wrote The Theory of Moral Sentiments: we judge ourselves through others' eyes, and sympathy holds society together. Self-interest was his engine, never his virtue.