Adam Smith’s Invisible Hand. This concept explains how a market will provide incentives for individuals to look out for the well-being of others while also acting in their self-interest. In this discussion, your task is to:  Put yourself in the shoes of an entrepreneur looking to start a new business somewhere.  

  • Explain how the invisible hand will lead you to consider the well-being of your potential customers over what you may call your short-sighted self-interest.  
  • How might the invisible hand effect what good/service you provide?  
  • Would the invisible hand effect the quality of goods/services you provide?

Adam Smith’s Invisible Hand


As an entrepreneur looking to start a new business, the concept of the invisible hand by Adam Smith would play a significant role in determining my approach and decisions. The Invisible Hand theory states that organizations that look after their own well-being unintentionally improve the well-being of society. The invisible hand implies that business people who pursue their own interests gravitate towards meeting the needs and desires of consumers. In the process, they contribute to the prosperity of society as a whole.

Considering the well-being of potential customers over short-sighted self-interest is in line with the ideologies of Smith’s invisible hand. Though it is true that my main goal in establishing a business is to make a profit, I acknowledge that sustainable prosperity is founded on customer loyalty and satisfaction. By prioritizing the well-being of my customers by offering quality products or services that genuinely address their needs, I can foster trust, gain repeat business, and create a positive reputation in the market.

The invisible hand would have a significant influence on the products I provide. In order to prosper in my venture, I would identify business opportunities or market niches where there is demand for certain goods or services. I would attract a customer base and create revenue by addressing these needs effectively. This process intrinsically requires understanding customers’ desires, tastes and preferences, and pain points, which in turn leads to an increased focus on their well-being.

In terms of the quality of the products I provide, Adam’s invisible hand would also come into play. In a competitive market, businesses that deliver low quality will likely lose customers to competitors offering better quality alternatives. This dynamic ensures that entrepreneurs like me are incentivized to maintain high-quality standards in order to retain customers and remain competitive. Furthermore, positive online reviews and word-of-mouth from satisfied customers can significantly improve the reputation of my business, attracting more prospective customers.

The Invisible Hand would guide me to balance my self-interests as an entrepreneur with the customers’ well-being. By providing products that surpass their needs and desires, I can harness the power of the invisible hand to achieve business success and contribute to society’s overall prosperity.