Adam Smith’s The Wealth of Nations uses the phrase “invisible hand” to describe how self-interest can coordinate economic activity without central direction.
Smith introduced the expression in his 1759 work The Theory of Moral Sentiments and used it again in The Wealth of Nations, published in 1776. In the famous example, a merchant who prefers to sell domestically may unintentionally support the public interest by investing locally.
The phrase is often connected with supply and demand because prices can transmit information about scarcity and consumer preferences. When buyers and sellers respond to changing prices, their separate decisions may help allocate resources. Smith did not claim that every self-interested action automatically benefits society, nor did he present the invisible hand as a complete theory of modern markets.
A common mix-up is treating “invisible hand” as another name for laissez-faire. Laissez-faire is a policy idea favoring limited government intervention; the invisible hand is a metaphor about unintended coordination.