The part of The Wealth of Nations (1776) which describes what future generations would consider to be Smith's invisible hand, ironically, does not use the term. The process by which market competition channels individual greed is most clearly described in Book I, Chapter 7.
Adam Smith uses the metaphor in Book IV, chapter II, paragraph IX of The Wealth of Nations. In the often misquoted and poorly understood paragraph quoted below Smith argues that a preference for the use of "domestic" industry over "foreign" industry to gain individual profit constitutes an "invisible" and benevolent hand which promotes the interests of the nation and society at large while at the same time enriching the individual. The individual may have a selfish motive but the use of domestic industry and labor enriches and promotes the interests of society as a whole.
| “ | By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it. | ” |
Smith may have borrowed the expression from Shakespeare's Macbeth. The expression is used in a dialogue in which Macbeth informs Lady Macbeth of his fears for their safety. Macbeth asks the night to destroy his enemy "with thy bloody and invisible hand" (Act 3, Scene 2).
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