Which theory describes the process of turning self-directed gain into social and economic benefits for all?

The invisible hand theory is a foundational concept in economics introduced by Adam Smith. It describes how individuals pursuing their own self-interest unintentionally contribute to the overall good of society. According to this theory, when individuals engage in economic activities—such as buying, selling, and trading—they make decisions based on their own needs and desires. These actions, while motivated by personal gain, lead to the allocation of resources in a way that can enhance the welfare of the community.

For example, a baker who wants to make a profit will bake more loaves of bread when there is a demand for them. In doing so, he not only satisfies his needs but also provides affordable bread to the community, contributing to the overall economic health. This process of self-interest guiding individuals towards outcomes that benefit society as a whole exemplifies the invisible hand of the market.

The other theories listed do not focus on the interplay between self-interest and social benefit in the same way. Social contract theory, for instance, deals with the legitimacy of authority and the origins of state power rather than economic processes. Monopolistic competition theory analyzes market structures and pricing strategies, and Keynesian economics focuses on government intervention in the economy, especially during downturns. None of these encapsulate the concept of