The Invisible Hand - 60 Second Adventures in Economics (1/6)

OpenLearn from The Open University2 minutes read

Adam Smith and Friedrich Hayek advocated for free markets where self-interested traders can freely exchange goods, leading to positive outcomes through the "invisible hand" of the market, even though it may take time for economies to reach equilibrium, prompting government interventions.

Insights

  • Adam Smith advocated for free market principles where self-interested individuals trading freely could lead to positive outcomes through the "invisible hand" of the market, a concept further supported by Friedrich Hayek.
  • While free markets are considered more effective than central planning, the time required for economies to reach equilibrium can lead to government interventions to address issues and frustrations that arise.

Get key ideas from YouTube videos. It’s free

Recent questions

  • Who proposed the concept of the "invisible hand" in economics?

    Adam Smith

Related videos

Summary

00:00

"Adam Smith's Invisible Hand and Free Markets"

  • Economist Adam Smith in 1776 proposed that governments should allow self-interested traders to freely buy and sell among themselves, leading to positive outcomes guided by an "invisible hand" of the market. This approach, supported by free market advocates like Friedrich Hayek, is believed to be more effective than central planning, although economies can take time to reach equilibrium, leading governments to intervene to address frustrations.
Channel avatarChannel avatarChannel avatarChannel avatarChannel avatar

Try it yourself — It’s free.