The theory of the “Invisible Hand” was first publicised in 1776 by Adam Smith, and has perhaps not borne more relevance than it does today.
This relevance, we believe, is to be found in the following question: who wields the power of the “Invisible Hand” today? In “An Inquiry into the Nature and Causes of the Wealth of Nations”, Smith explains that, in any economic market;
individuals intend only their own gain, and they are in this, as in many other cases, led by an invisible hand to promote an end which was no part of their intention.
This statement refers to the economic benefits that can be created when consumers try to maximize their own good, without necessarily taking account of the broader consequences of their actions.
In this sense: if social benefits can be created pursuant to such unintended actions, what can be achieved when individuals consciously move in concert toward a shared objective, i.e. consciously maximise their own good?
The success of any business then, depends on the acceptance and support of consumers trying to maximize their own good. What if however, consumers can maximize and provide for the good of the community and create those unintended economic benefits Smith spoke of, while simply maximising their own gain?
As mentioned in an earlier post, the roles of corporations are changing and the success of such companies depends solely on their ability to ensure the health of their consumers and surrounding communities. The consumers of such companies will have the final say as to whether those companies have succeeded in achieving this objective.
In answering the question posited above:
who wields the power of the “Invisible Hand” today?
the answer is simple; YOU do. Just remember, with great power comes great responsibility ;)
