In economics, what does the term "invisible hand" refer to?

The term "invisible hand" is a concept introduced by Adam Smith, a foundational figure in economics. It describes the self-regulating nature of the marketplace, where individual self-interest inadvertently contributes to the economic well-being of society as a whole. When individuals pursue their own interests by creating goods or services that others desire, they inadvertently promote greater societal benefits through their production choices and the prices they set in a free market. This phenomenon leads to an efficient allocation of resources and fosters competition, innovation, and overall economic growth. Adam Smith's metaphor illustrates how market participants, by seeking their own gains, help to coordinate economic activities in a manner that benefits everyone, even without any central planning or government intervention.