According to one definition, the “unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand.”
Invisible hand was a term coined by 18th century Scottish economist, philosopher and author Adam Smith that many believe he used to describe the self-regulating nature of the marketplace. Surprisingly, that is not how Smith originally intended it.
Today, the concept of the invisible hand has been simplified beyond Smith’s original uses and is generally understood to mean that if consumers are allowed to choose what to buy and producers are allowed to choose what to sell, the market will settle on pricing that benefits all members of a community.
In the case of everyday consumable products the concept applies quite well, but when it comes to luxury items the the invisible hand cannot influence market pricing because such products are too expensive for the majority of people to afford. Consequently, the market is unable to settle on pricing that benefits all members and only the elite class in a community can afford them. Luxury is beyond the reach of the average individual.
So much for the invisible hand.
Now you see it, now you don’t.
