Adam Smith’s invisible hand is probably the most famous idea in economics and one of the most frequently misunderstood. What he meant was specific: in competitive markets, individuals pursuing private gain are often led to produce outcomes that benefit the public without intending to. The baker bakes good bread not out of benevolence but because […]

Adam Smith organized the economy around three factors of production: labor, land, and capital. Each earned its return – wages, rent, and profit. He did not present this as a neutral description. He was acutely aware of how power moved among the three groups, and he was consistently suspicious of capital owners in ways his […]