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Adam Smith's invisible hand
The "invisible hand" is a metaphor used by Adam Smith to describe a principle, that is, the social order that can produce good results appears as the unintentional result of personal behavior.

"Invisible hand" has become an image term to express the perfect competition mode of capitalism.

The main characteristics of this model are private ownership, everyone is for himself, everyone has the freedom to obtain market information, free competition, and economic activities are not interfered by the government.

Adam Smith's successors completed an accurate analysis of the market mechanism of perfect competition in the form of equilibrium theory. Under the condition of perfect competition, production is small-scale, all enterprises are operated by business owners, and a single producer has no influence on the market price of products. Consumers use money as a "vote" to decide the output and quality. Producers pursue profit maximization and consumers pursue utility maximization. Price freedom reflects the change of supply and demand, and its function is to allocate scarce resources and distribute goods and services. Through the invisible hand, entrepreneurs get profits, workers get wages determined by the supply of competitive labor, and landowners get land rent. Supply automatically creates demand, and savings and investment reach a balance. Through free competition, the whole economic system reaches a general equilibrium, and the principle of laissez-faire is followed when dealing with international economic relations. The government does not control foreign trade. The "invisible hand" reflects the economic reality in the era of free competition in early capitalism.