Adam Smith and the not so invisible hand: A revision for the undergraduate classroom

Students in introductory economics rarely get much exposure to historical ideas, but they often hear about at least one historical concept: "the invisible hand." Unfortunately, what they learn about the invisible hand - at least as far as is evident in the leading undergraduate textbooks - is flawed, largely because it is removed from its historical context. In this paper, we describe recent research on Smith's metaphor and suggest some simple ways for instructors to use it - informed by the context in which it was written and Smith's original intent. We also describe some simple classroom experiments that aid in these discussions.