Adam Smith’s Invisible Hand is commonly referred to as b) the market mechanism. This concept describes the self-regulating nature of the marketplace, where individuals pursuing their own self-interest unintentionally contribute to the economic well-being of society as a whole.
Smith introduced this idea in his seminal work, ‘The Wealth of Nations,’ published in 1776. He argued that when individuals make choices to benefit themselves, they inevitably produce positive outcomes for the economy, as if guided by an invisible hand.
For instance, when a producer creates a product to make a profit, they must also consider consumer needs and wants. This competition and interaction lead to innovation, efficiency, and ultimately, economic growth. Thus, the Invisible Hand emphasizes the importance of the market mechanism in orchestrating economic activity without the need for central planning.