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for the pursuit of self-interest to result in positive social outcomes (The Economic Times. ,2019).
He supported the provision of public goods and infrastructure, the enforcement of property
rights, and the creation of a legal framework, for instance. Smith thought that an institutional
framework that supports the general welfare ensures fair competition, and prevents fraud was
necessary for a well-functioning market.
Despite what the general public believes, Smith did not only support the notion that self-
interest is necessary for a functioning society. He recognized the role that morality and social
norms play in influencing people's behavior and encouraging collaboration and trust (Nasrudin,
A.,2020). Smith thought people should be morally restrained and show empathy for others.
Although it is frequently disregarded, this line of thinking is essential to comprehending his
comprehensive view of society and economics.
The "invisible hand" theory put forth by Adam Smith is not limited to the field of
economics. It illustrates his conviction about the value of decentralized decision-making. Smith
maintained that people make a great deal of decisions in their daily lives that are motivated by
self-interest (The Economic Times. ,2019). These individual decisions have a collective impact
on how resources are distributed and how goods and services are distributed in a free-market
economy. The unintentional coordination of millions of these small individuals acts as the
"invisible hand" to create a society that is more productive and efficient.
Critics of the "invisible hand" theory do exist, though. Some claim that it oversimplifies
the intricacies of actual economies, where there may be market failures and incomplete
information (Nasrudin, A.,2020). To address market inefficiencies in such circumstances,
government intervention might be required. Therefore, rather than being a one-size-fits-all
theory, the invisible hand should be viewed as a guiding principle for comprehending the
