Although Adam Smith only used the term once in The Wealth of Nations, his image of the invisible hand has been perhaps the most influential idea in more than two centuries of discussion of economic theory and policy. Much of economics is an attempt to understand the conditions under which self-interested individuals are led as if by an invisible hand to pursue the interests of society. This essay argues that market imperfections, persistent unemployment, and failures of the invisible hand are the norm, and proposes that the standard results of welfare economics should be revised or reinterpreted to reflect this reality.
