The word invisible hand in economics is a metaphor that signifies all the unseen forces moving the free market economies. The best interests of society are always fulfilled through the consideration of the freedom and self-interest of different individuals to consume and produce. A constant interplay of personal pressures on market demand and supply results in the natural escalation of prices and the flow of trade (Friedman, 2021). The term “invisible hand” was first used by Adam Smith in his work “The Wealth of Nations,” in which he describes the techniques used within free markets to incentivize different individuals, produce whatever is required in society, and act on their interests, as explained in this paper.
I agree with the general concept and the large-scale interpretation expressed in “I pencil.” In the article, the author shows the complexities which arise from social coordination (Read, 1958). When no one is familiar with what it takes to make a pencil, no group can have enough knowledge to dictate to the other individuals the approaches to undertake complicated tasks. The invisible hand adopts the let do or let go approach to existing markets. That means that the market can always attain an equilibrium when the government and available interventions fail to force it to adopt unnatural patterns. “I pencil” acknowledges that freedom was not just a source of efficient and responsible pencil production. It was a foundation of the process of civilization, which means a complex praise-worthy society that defies the ability to plan its developments and creation. Therefore civilization falls and rises with freedom (Friedman, 2021). The current culture is characterized by the erosion of freedom by public servants. Such is because they keep substituting their infinitesimal knowledge for the creative wisdom of a society that is free and coordinated through arrangements that are voluntary and that are far from encouraging prospects for the future.
My opinion is that the government has significant functions in the market economies. Some of the government’s roles are providing a social and legal framework for business operation, maintaining competition, and providing services and goods to different individuals within the markets. The government is also responsible for income distribution, correction of externalities, and stabilization of the economy (Carrillo, 2019). If the government chooses to adopt the invisible idea, it would mean that specialization in production could cause individuals with self-interests to produce all the necessary products socially for the benefit of everyone in society. Such is attributed to the fact that higher levels of specialization create a web of mutual interdependencies. A good example is a shoemaker who needs other individuals to produce their clothes and sell food for them.
In conclusion, specific trends can only prevail in a free society. The trends involve self-responsibility, better morals, passionate strife to excel intellectually, willingness to overcome various obstacles, and energetic enthusiasm, which is turned inwardly to enhance self-improvement, an entrepreneurial spirit, free pricing, and competition. All the knowledge in society is from the freedom of operation. Ignoring such a fact causes individuals to live with the belief that they can explore an authoritarian culture. It is, therefore, essential to allow all creative energies to remain inhibited. Such an action creates the possibility of ensuring that individuals organize themselves in harmony.
Reference
Carrillo, P. D. H. (2019). The invisible “Invisible Hand” by Adam Smith. Revista de economía institucional, 21(40), 143-161.
Friedman, M. (2021). 1. The Invisible Hand in Economics and Politics. In Singapore Lectures 1980-2018 (pp. 1-18). ISEAS Publishing.
Read E. L (1958) I pencil My Family Tree as told to Leonard E. Read Dec 1958 https://oll.libertyfund.org/title/read-i-pencil-my-family-tree-as-told-to-leonard-e-read-dec-1958.
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