The Invisible Hand – 60 Second Adventures in Economics (1/6)

The Invisible Hand – 60 Second Adventures in Economics (1/6)


60 Second Adventures in Economics. Number 1: The Invisible Hand. An economy is a tricky thing to control and governments are always trying to figure out how to do it. Back in 1776 economist Adam Smith shocked everyone by saying that what government should actually do is just leave people alone to buy and sell freely among themselves. He suggested that if they just leave self-interested traders to compete with one another, markets are guided to positive outcomes as if by an invisible
hand. If someone charges less than you, customers will buy from them instead. So you will have to lower the price or offer something better. Whenever enough people demand something, they will be supplied by the market. Like spoiled children, only in this case everyone is happy. Later free marketeers, like Austrian economist Friedrich Hayek, argued that this hands off approach actually works better than any kind of central plan. But the problem is, economies can take a long time to reach their equilibrium, and may even stall along the way. And in the mean time people can get a little frustrated which is why governments usually end up taking
things into their own, more visible, hands instead.

100 Comments

  • Michael Taylor says:

    The free market is you and me. We SHOULD get all the power.

  • shilelea says:

    deplete all our natural resource? most experts agree that somewhere around 200 years from now fossil fuels may be too rare to provide for us. lets put this in perspective, 200 years ago cars did not exist, and there were no electric powerplants. We have no clue what demands there will be for power and how it will be provided 200 years from now. there hasnt been a case in the history of the earth that depletion has happened to the extent that technology didn't surpass it.

  • jalyn monfort says:

    i dont like this vidow it it stupid

  • jalyn monfort says:

    i dont like this video it is stupid

  • cruelangles says:

    Thoughts when I saw video title:
    Invisible hand! Adam Smith! English-man! Capitalism! Never works! 7th-grade Economics Class! Republicans!

  • BluewaverNatashaAloe says:

    Wasn't sixty seconds! You LIE!

  • Consuella Belsches says:

    im necer going to get 1:20 mins of my life back i thought u were turning someone invisible

  • ladamyre says:

    Yeah? What about the guy that's putting sawdust in his bread so he can sell it cheap, giving people appendicitis? Or the guy that ships toxic chemicals in a tanker car to one area and saves money by not cleaning the tanker, then ships milk back on the return trip that he can sell cheaper because he's willing to poison (only a little bit) his customers?

    Lazeiz faire capitalism is an open license for anyone willing to commit crimes for money, pure and simple.

  • jackflintstone says:

    Oh and that never happens in state run enterprises, right? Get a grip, man. You clearly have no perspective. The big problem with your thinking is that you compare capitalism against your idea of utopia. FYI, there has never been a system of economics that have taken more people out of servitude and poverty than free market capitalism. It isn't perfect but at least you don't have to administer it at the point of a bayonet or gun.

  • jackflintstone says:

    You are an oxygen thief and a blind one at that.

  • hellzone100 says:

    ILLUMINATI!!!!!!!!!!!!!!!!!!!!

  • hellzone100 says:

    Are you saying someone should start regulating are AIR and are WATER ?
    The fundamentals. h2o, o2
    You know that will not not happen in any scenario. Not without bloodshed.

  • ladamyre says:

    I'm not talking about state run enterprises, I'm putting perspective into this black and white way you lazeiz faire, Ayn Rand worshipers always try to put this "free market" argument. Without some oversight, without some incentive from government for corporations to act right and hire Americans the free market will degrade into a dog-eat-dog world where you have no idea what's in your food, whether the car you bought is going to blow up because it was cheaper and all the jobs are off to China.

  • TacWaffles says:

    No one who wants to make money intentionally makes their product out of unhealthy shit. Well, some do, but they don't make it very far when there is any sort of education and publication. When people die from a product, no one will shop there again. In the 18th century, people didn't have a printing press. Bacteria was not a known phenomenon. Today, we understand risks involved with eating too much McDonald's, or with smoking. We certainly know when something is severely dangerous.

  • TacWaffles says:

    In fact, the last widespread misunderstanding of health concerns was the failed Food Pyramid pushed by the government, which stressed eating more grains than any other food group, when in reality grains (even wheat bread) contain tons of carbohydrates, which are very bad for you in any significant quantity. Government listening to certain scientists and pushing a certain image of how to eat helped accelerate a widespread obesity epidemic.

  • monolyth421 says:

    Some regulation is still required, or we'd still have children working 18 hour days for pennies.

  • cruelangles says:

    Why, thank-youl I enjoy converting oxygen into CO2. My eye-vision is very severe, but your eyes obviously can't tell that I'm younger than you and that comment was posted in little-wee hours of the morning. Also, capitalism and socialism are in a circle not in a straight line(or so I was taught). At both extremes, they actually meet and neither work. Good day.

  • JapanForSale says:

    Or it's the people who take home an order of 4 cheeseburgers, a 16 inch pizza, and an order of cheesy sticks for their family's dinner. Or it's the moms nowadays who equate home cooked meal with microwaving frozen chicken butt nuggets and Kraft Mac'n'Cheese.

    In fact, in my line of work, I see customers who pick the burger grill over everything else on a daily basis. And I work in a fking hospital, and these are doctors and nurses. You'd think that'd know better.

    People make stupid decisions.

  • Isaiahlikesutube says:

    If you typed this thinking it was practical, held water, made sense, or could possibly happen YOU ARE A FUCKING MORON. you just use negative outcomes as a source of uninspiration and negativity against this video, whereas your comment actualy has no basis for any of its claims and should not be posted.

    DELETE YOUR YOUTUBE ACCOUNT AND THROW YOUR COMPUTER OUT THE WINDOW, IDIOTS LIKE YOU DONT DESERVE THE INTERNET.

  • aznfanatic6 says:

    Or maybe you should let them buy what they want instead of hoping the gov will indirectly put a gun to their head &make them buy something else b/c u know best for every1 or something. Maybe fastfood is cheap b/c soda/meat is artificially cheap b/c corn subsidies (which btw, benefit lobbying corps more than the small farmer). If they get sick eating, taxpayers pay for healthcare, so no incentive for them to eat healthy. Also btw (stab in the dark), Monsanto's revolving door is w. the Democrats.

  • LinaLoza says:

    How did I go from "dumb ways to die" to economics?

  • mbonnar says:

    Adam Smith also believed that tariffs and cross-border trade taxes were essential for protecting national economies. Free trade and market was only relevant nationally. International "free" trade and markets harmed individual national markets, which crashes everything. But most "free" market "economists" ignore or misunderstand this fact.

  • Stephan Cox says:

    Mmm. That's good Kool Aid…

  • InfiniteRadiiEdge says:

    In a unregulated economy (the buyers try to get much as possible with little as possible & the sellers try to sell much as possible at the highest prices) the self-interested sellers of goods would exploit their workers.
    This is reality. It's happening right now in 3rd world countries. Cheapness of goods comes at the price of exploiting workers.
    [What's the problem? Everyone who wants a job has a job (whatever the conditions).]

  • loi karen says:

    I have a question, does free trade really benefit the developing countries? I really need an answer please. Thanks

  • GUCCI_SUSHI says:

    the invisible hand of the free market? that is not what the invisble hand means in the wealth of nations. It;'s baffling why people use this idea in a waay that has nothing to do with adam smith. please educate yourself in economics!

  • GUCCI_SUSHI says:

    study the austrian school. you will find that government regulation and control always hurts society

  • Ixmore says:

    Well said Brother. Also, a free market can be more effective with some common sense and some good old fashion Muck racking.

  • Nathan Nguyen says:

    Why economy take long time to reach to equilibrium? I don't get it. Please help^^

  • InfiniteRadiiEdge says:

    In the Gilded age, workers were exploited on a daily basis in mechanical jobs whether it be meatpacking, fertilizer, or semi-automated jobs.
    Meatpacking: people lost body parts daily… once they were inefficient, they were fired.
    Fertilizer: once they were inefficient, they went to even more dangerous/unskilled jobs coming into contact with acid.
    Semi-automated: Machines need to be fixed, but adults will not fit?
    Well just send children there.

  • InfiniteRadiiEdge says:

    Workers in 3rd world countries are currently facing similar conditions.

  • InfiniteRadiiEdge says:

    Here are thought experiments for unregulated economies: (1) a company can make its employees work overtime without repercussion (firing any undesirable employees).

    (2) An employee gets injured; no compensation
    (2.2) insurance denies based on pre-existing condition

    Upon investigation of the novel (1906), many regulations were created. I understand that it was meant to be propaganda for socialism which only took off in U.S. after the Great Depression (1932), a time for desperate measures.

  • InfiniteRadiiEdge says:

    I understand the profit incentive will always overshadow all else, but it does not sound acceptable to allow [preventable] abuses.

  • InfiniteRadiiEdge says:

    The example you gave was from a regulated economy. Competition can still happen in regulated economies. The example I gave of the Gilded Age was incorrect since the government did help 'natural monopolies' like steel mills and grid power rise.

  • InfiniteRadiiEdge says:

    The trend is that the profit incentive always seem to triumph over individual property rights. Moreover corporations are considered to have citizen rights in America (Citizens United v. Federal Election Commission) [but with lower taxes than individuals], and even this is being considered….
    watch?v=mmWjYUJvSyA

  • InfiniteRadiiEdge says:

    That's an example of competition in a regulated market.
    More employees could work there if the pay wasn't as high ( assuming there aren't labor unions, but there are ), but they don't just sell products, they sell an image with their price tag.

  • InfiniteRadiiEdge says:

    The competition is not for the product, but for employees. They sell to people who only buy 'American cars'. If they can seem more 'American' then their competitors; they can sell more.

  • InfiniteRadiiEdge says:

    I didn't say it was a bad thing. You said free employee movement would be better off unregulated and I think so too. It's not quite possible right now because of the influence of the unions.

  • InfiniteRadiiEdge says:

    Right, if American cars didn't come with American wages, they wouldn't be favored so much.
    I'm against most regulation besides the FDA , roads, medical research, and banning of abusive loan rates and the like. I think people should save their own money (opposed to social security) personally and spend their own money (opposed to many taxes.)

    It's odd to me to argue for regulation or no regulation.
    It's almost as if being a moderate is not an option.

  • InfiniteRadiiEdge says:

    Without American wages, you just have an expensive car made in America with labor by non-Americans (those who will accept lower wages). The American standard of living seems too great to decrease the wage.

    I'm not quite sure if the free market wouldn't quite work unless U.S. was in isolation with the world market which has lower labor costs .The other non-alternative is to have high tariffs again…and that that seem to work.

  • youser2 says:

    Is the narrator David Mitchell??

  • Ricther Belmont says:

    You'd think the lassies Faire thing of the 1920s and the recession caused by deregulating everything and letting bankers do as they please would encourage people not to believe in a santa claus like the invisible hand.

  • Alexi Danchev says:

    I cannot download it using Firefox' download helper. Shows 0 bytes. What's the reason?

  • madd_step says:

    But the hands off approach stopped the greatest depression in known history in 1921 in under a year, while the reaction by the government and monetary policies in 1929 caused the great depression. This video is right the market sometimes isn't the fastests to respond to a down market but government involvement never seems to fix it. Just like things like fixed interest rates and garenteed loans caused the 2008 recession.

  • Rich Grise says:

    DING!!! DING!!! DING!!!

    This is the first time I've seen or heard anyone mention the time lag thing. It takes a non-zero amount of time for the market to respond – when government dictates, it doesn't get done sooner, but saying "We're writing up the rules now" gives the sheeple a feeling like "Well, at least they're working on it." While with a Free Market doesn't offer instant solutions, command and control can't provide instant solutions either; merely the _illusion_ of solutions.

  • fooloof says:

    While Adam Smith believed the principles discussed in this video, this isn't the invisible hand concept.

    "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."

    so, the "invisible hand" was more about people being more productive, not competition and pricing.

  • Zarif Ismail says:

    IT'S MARK!!

  • Zarif Ismail says:

    I feel like I am Jez, and Mark is talking about business as always

  • BAppleJuice says:

    Companies nowadays use their given market freedom to scream from every screen that YOU need their product. And since most people are busy watching screens nowadays, these regular folks aren't thoughtful enough to decide whether they need this product or that, so they end up buying whatever screams the loudest and happiest message.

    I like the idea of a total, free market, but what's happening now is complete saturation of senses causing mass consumer confusion.

    What is that the result of?

  • InfiniteRadiiEdge says:

    The consumers have the illusion of choice. Click on the first result of "illusion of choice" in Google images. While it looks like many companies are competing with each other, many markets are owned by a few people.

    The same companies will sell competing brands even through advertisement.
    Psychology fact: the more something is repeated (true or not), the more likely people will believe it (works with propaganda too). Hence repetitive advertising: slogans, product placement,billboards etc…

  • InfiniteRadiiEdge says:

    Companies have been spending more and more on advertising than ever before.
    Pharmaceutical companies spend more in advertisement than research and development . It's all market-driven: they need sick people, but people aren't always sick. So how would they get their products sold? Give doctors and hospitals promotion and over-prescribing is rampant as ever.

  • Debbie Dube says:

    very well presented all all 250 yrs of US economics is 30 sec. Bravo 🙂

  • Andy Dunlap says:

    This is quite a fun way to represent the effects of the invisible hand! 🙂

  • nustada says:

    " You just have to make the customer think you are selling the best products without selling the best products through advertisement."

    Not entirely true, that is only true when differences are marginal and subjective, eg cigarettes.

    Marketing costs money, word of mouth does not. A company the minimizes marketing in favor of R&D and material quality, may simply outclass.

    Have you ever heard of a company called "Ferrari", I bet you have. Yet they never spent a penny on marketing.

  • John Jeets says:

    Thanks for the video ! 

  • José Antonio Vidal Melzi says:

    An invisible hand with two eyes and a second hand ready to help

  • El Riton says:

    Is this video subtitle ? (and can you just paste me the link if you find it)

  • benjervi says:

    Is this narrated by David Mitchell?

  • Mihai Andronik says:

    Guys please subscribe to my friend

  • Mihai Andronik says:

    ouLearn on Yutube

  • Gamerzilla2012 says:

    Burn all money melt all coins. Make market squares in the center of towns to trade eggs for wheat for sugar for flour for fruit. Life would be simplistic, relations with other people would be better. Those who don't own a stand or specialize in a good can trade amongst themselves in a designated area. Each stand or in the trading area, there are scales to weigh the item, etc. People set their own prices and there is no competition because one person who sells, let's say… Apples… Does not want people to pay him in just blankets, rather the stuff he needs to support his family-WHICH is set by the customer at his stand and the owner. Negotiations would influence the competition instead because the particular person may need milk for their child, etc. desperately and that way they can negotiate the fair price to maintain an average…

  • Alexey Sherstnev says:

    В этом ролике ошибка. Продавец сыра почему-то один.

  • Rúpìgo .K says:

    a very deceptive and simplistic perspective that continues to be propagandized.

  • AnathemaAdvocate says:

    The idea is simple, that people know more about their own preferences than third party bureaucrats lording it up in some capital thousands of miles away. Allow people to make their own economic decisions and more mutually beneficial outcomes occur. hence GDP growth, low unemployment etc. More win win situations. 

  • Ath3na says:

    🙂 nice video

  • Cynch Maristelle Capili says:

    please help me .. I have a Debate with this TOPIC .. Does Invisible Hand Exist? … my problem is I don't know yet if I'm in a Pro side or in an Anti side … :/ I really can't understand what invisible hand is and how it is related to economy..

  • Joe Ooi says:

    This gave me Ebola

  • Sam says:

    The Economy is a tricky thing to control, and the government desperately tries to control it.

    In 1776 the economist Adam Smith proved everyone wrong, he believed people should just buy and sell freely among themselves he thought if businesses worked along side eachother then the consumer would go to where-ever they thought they would get the products.

    Kind of like an invisible hand
    Businesses would have to lower their prices or deal out something better in order to keep their loyalty with their consmers

    Austrian Economist Frederic Hiyak Agreed that this amount of freewill worked better then any other plan.

    The problem is economies can take a long time to reach their equilibrium, and so people can get quite frustrated which is why the goverment with their visible hands end up taking over the economy again.

  • Storethis says:

    This helped me pass World History. Thank you.

  • Jakedesnake97 says:

    this dumb (in a good way) & short video helped me with my microeconomics class. Thanks!

  • Van Nguyen says:

    awsome!!

  • Tomas Ludvik says:

    This is not what Invisible Hand is. What Smith discover and what Invisible Hand really is that from selfish interest of one benefit whole society.

  • psychat says:

    thank u

  • Jason McNab says:

    You thought that last quip was fair, but it is actually bias.

  • Katherine Maurer says:

    David Mitchell?

  • Frodrich Bismork says:

    Correction: The invisible hand is always misquoted and does not appear in this context in "The Wealth of Nations". It is an interpretation by economists who came after Smith.

    In 1776 Adam Smith published "The Wealth of Nations". In this book the invisible hand is only mentioned in the context that private persons preferred the home trade to the foreign trade – And this is ultimately good for a nation.

    In 1759 he published "The Theory of Moral Sentiments" in which the invisible hand guides participants in a fully unregulated economy to do good for society. Quote: "The rich…are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society".

  • stau ffap says:

    It's called the invisible hand because just like god it truly is so invisible, that noone has ever measured it in the real world. Like god it doesn't exist and is nothing but a dogmatic, immature, unscientific belief.

    I can't believe, that they still teach this nonsense to the general public.

  • William Chandler says:

    Thank you David Mitchell!

  • Heru God Of War and Sky says:

    lol that wasn't even a good explanation

  • Sully Flynn says:

    It says tell us what you think – I think that was absolutely epic. So helpful. Thankyou!!!!

  • Gio says:

    Dude in the middle at 0:47 looks undeniably like Jimmy Carr

  • Nantchev says:

    Too simple of an explanation. Through the invisible hand standards of living increases, prices go down and products become more complex. Its competition at its finest.

  • shima nezamipour says:

    Hi from Iran. please put subtitles.

  • Alexander Kilimnik says:

    Ever wonder which hand is invisible? (Right or Left)

  • Sr. says:

    Hello American i invite you to see how is the Brazil tip a guy said "live the maduro"

  • ToriZealot says:

    Please find this quote in the Wealth of Nations:
    "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."

  • Mei Mackleer 李梅 says:

    So the invisible hand allocates resources in a market?

  • Madeline Green says:

    Love that David Mitchell is the narrator! The Adam Smith quote about the invisible hand is, however, a misnomer. He was actually critiquing capital mobility in the Wealth of Nations, not praising it.

  • John Doe says:

    "There , there it is again — the invisible hand of the marketplace giving us the finger again "
    https://condenaststore.com/featured/there-there-it-is-again-the-invisible-hand-of-charles-barsotti.html

  • Roxanne says:

    you know how i feel about capitalism mark
    yes, confused

  • John Contos says:

    ivisible hand england school of econ…try and get you the honorary taken seriously

  • John Contos says:

    good luck

  • Joi Davis says:

    Talking way too dam fast my goodness

  • HitProof says:

    I have never seen a biggest bullshit than "Invisible hand"
    I think even bible has less bullshit than this crap

  • Wikilix XD says:

    Hello GGIS

  • Dracula Nova says:

    Would you like to play capitalism?

  • Kojack says:

    Invisible hand=illuminati confirmed

  • Vivian Gobena says:

    60 second? I need 60 minute of economics because it is awesome

  • Zack Smith says:

    my professor made me watch it help me

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