1 definition by Zeida
used by adam smith in "the wealth of nations," it describes the process by which capitalism is self-rectifying.
suppose that in some town with a closed economy, all the smiths decide to collectively raise their prices to make them all rich. when a new smith (or a number of new smiths) joins the industry, realizing that he can have lower prices and still be profitable, the smiths who conspired are forced to lower their prices back down (or will go out of business). this is the invisible hand at work.
by Zeida June 8, 2004