b. the ability of free markets to reach desirable outcomes, despite the self-interest of market participants
Work Step by Step
Adam Smith holds that people are self-motivated but an intangible force (known as the invisible hand) guides this self-motivated activity to promote general economic well-being. In other words, by pursuing their own interests, people tend to make others better off in the economy. For example, when a baker sells bread in order to make money, he makes people who want to purchase bread better off.