"Laissez Faire" and the "Invisible Hand"

The invisible hand:

The invisible hand is a term that Adam Smith uses in his book published in 1776 "An Inquiry into the Nature and Causes of the Wealth of Nations". He states:

"Every individual necessarily labors to render the annual revenue of the society as great as he can. He generally neither intends to promote the public interest, nor knows how much he is promoting it ... 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 society that it 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.”

Smith explains that all humans work for more belongings and a better lifestyle. As a person is working to gain more, he is not working for the interest of others, but this is also an outcome of his work. As a person is specialized and in competition for scarce recourses, people better their work and become more efficient. As more and more of society start working to better themselves and gain more, they become more specialized and produce more. They do not intend to help their society directly as there is no incentive but this is the outcome of their hard work.  It can be said that, the invisible hand when not interrupted by the government, is a natural phenomenon that determines revenues, wages and market prices through competition of scarce resources. Adam Smith also has a famous saying “Laissez Faire” (let it be) that goes hand in hand with his theory of the invisible hand (a little play on words J). The market according to smith will find it’s ideal demand and supply through the competition of scarce resources (invisible hand) if left alone and not interrupted by the government: price floor, price ceiling, minimum wages etc.. (laissez faire).  

Reference: http://www.investopedia.com/terms/i/invisiblehand.asp