Which term was coined by Adam Smith to describe the self-regulating nature of the marketplace?

The term "Invisible Hand," coined by Adam Smith in the 18th century, refers to the concept that individuals pursuing their own self-interest in a free market economy inadvertently contribute to the overall good of society. Smith argued that when individuals seek the most benefit for themselves, they make decisions that can lead to optimal resource allocation and economic growth, even though that is not their explicit intention. This self-regulating characteristic of the marketplace suggests that when people act in their own interest, it can lead to societal benefits without direct intervention or overarching control.

Understanding this term is crucial because it encapsulates the idea that markets can effectively coordinate economic activity through the actions of individuals. The idea of the "Invisible Hand" contrasts with more controlled economic systems, where regulation and planning dictate production and consumption, emphasizing the natural equilibrium that arises from voluntary exchanges in a market. The concept underscores the importance of individual choice and decentralized decision-making in the economy.