Silicon Valley Reinvents The Invisible Hand — techcrunch.com

Adam Smith’s invisible hand is the guiding force of the market in a capitalist system. By allowing everyone to make independent decisions in whatever way they define their self-interest, the market is presumed to automatically clear, moving goods and services from those who can offer them to those who most desire them. It’s ultimately a statement about market efficiency. That same invisible hand also rules the labor markets. Salaries are commensurate with skills, and employers compete for the workers they desire. If one company is able to create more profit from a talented individual than another company, then they theoretically will offer greater rewards (since they can) and poach that worker away.

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