Key Arguments

• Smith notes that 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.'
• Yet '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,' and 'By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it.'
• Smith expresses scepticism toward professed public-spirited traders: 'I have never known much good done by those who affected to trade for the public good.'
• He argues that each individual 'in his local situation' can judge far better than any statesman 'what is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value.'
• A statesman who tries 'to direct private people in what manner they ought to employ their capitals' would both 'load himself with a most unnecessary attention' and 'assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever.'
• Such authority would be 'nowhere ... so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.'

Source Quotes

He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. 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 no part of it.

Nor is it always the worse for the society that it was no 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.

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.

It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it. What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can in his local situation judge much better than any statesman or lawgiver can do for him. The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can in his local situation judge much better than any statesman or lawgiver can do for him. The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. To give the monopoly of the home market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must in almost all cases be either a useless or a hurtful regulation.

Key Concepts

• 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.
• 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.
• What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can in his local situation judge much better than any statesman or lawgiver can do for him.
• The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever

Context

This is the core 'invisible hand' passage of Book IV, Chapter II, where Smith contrasts spontaneous, decentralized capital allocation with the pretensions and dangers of state-directed investment, reinforcing his critique of protectionist regulations.