An Inquiry into the Nature and Causes of the Wealth of Nations

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   When each participant pursues his own interest in a free market, the aggregate result can serve society better than the declared intention of any single actor.

   An Inquiry into the Nature and Causes of the Wealth of Nations · 1776

   Self-interest, filtered through prices, can produce a good no one intended.

   Smith argues that the price mechanism coordinates the decisions of millions of people who do not know one another. Each merchant picks suppliers and customers to make a profit, but in doing so allocates resources where demand is higher and costs lower. His classic example: the trader prefers domestic to foreign industry not out of patriotism but out of self-interest, and through that preference he supports the revenues of his own country. The invisible hand is not a promise that self-interest always produces public good — Smith describes conditions, not a miracle.

   “He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”

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