Guillermo Solomon, a sociologist at UC-Los Angeles, told me that the “invisible hand” model was one of the key ideas for his field when he began studying “the invisible hand of capitalism” more than 15 years ago. A key idea, he says, is that economies don’t emerge from the free market, but from social forces and institutions, such as schools, unions, and government. “We have to understand the ‘laws’ and how they can be applied,” Solomon says. For instance, the invisible hand model is also in place in many countries with weak unions. Indeed, a global survey done by the Institute of Economic Affairs found that 90 percent of countries where unions are powerful are also “developed” economies, and a large majority (89 percent) of them were in North America. Solomon tells me that the “invisible hand” approach has roots at Harvard, where he was a visiting professor from 1970 to 1974.

One other feature of the model, which I was taught as an undergraduate and discovered more recently by a professor friend, is that there is some overlap between “the invisible hand” and Marx’s notion of the “productive forces.” In other words, it’s kind of like how in capitalist economies, the private sector generates profits and wages, while the public sector (i.e., state) provides the public goods the private sector needs to work. This overlap is what allows some of the U.S.’s top-ranked companies in the Fortune 500 list to survive with a small workforce, while some in other countries’ industrial sectors cannot be revived without a huge amount of public subsidies.

Another key idea of his is that the more market-oriented and competitive your economy is, the better it is for human happiness and well being, and that includes wealth creation. The more market-driven economies have people with high incomes, and who are willing to buy goods and services, there is less social stress and dissatisfaction in both societies and countries. In fact, in the U.S., the gap with other advanced countries is widening, not narrowing.

So that’s the basic theory. Why this hasn’t taken hold outside academia and government, for instance?

People like Milton Friedman were the first to notice what was happening, I think. Friedman argued that markets had more in common with governments than with private individuals, and that the “invisible hand” theory was an overly optimistic or misleading account of the causes and