Invisible hand and Wu Wei

The theorem of Invisible Hand can be quite similar to wu wei (without action) in philosophical Daoism. Laozi in his book of “Dao de jing” stated that there was no description or definition for Dao (they way) and one will need to improve and learn to acquire “De” to be closer to Dao. And the best way to reach the (never able) state of Dao is though wu wei. Leave everything to nature and it will reach the harmony state of Dao.

It looks simple, just like leaving the market to the invisible hand and then the market will reach equilibrium automatically. Below is the explanation of invisible hand from www.investorwords.com:
“Term used by Adam Smith to describe the natural force that guides free market capitalism through competition for scarce resources. According to Adam Smith, in a free market each participant will try to maximize self-interest, and the interaction of market participants, leading to exchange of goods and services, enables each participant to be better of than when simply producing for himself/herself. He further said that in a free market, no regulation of any type would be needed to ensure that the mutually beneficial exchange of goods and services took place, since this "invisible hand" would guide market participants to trade in the most mutually beneficial manner.”

This is Economics and Adam Smith was born in era of Industrial Revolution and the emergence of Capitalism and middle class. People in that era were seeking profit, market, trade and materials.

However, Laozi’s era was more than 2000 years ago. Facing a warring period, uncertain future, war, and poor, Laozi looked to nature, wu wei (without action), universe changes, self improvement (De), and Pu (simplicity) to reach the way of harmony. And according to Wikipedia:

“Wu wei (无为) is a central concept in Daoism. The literal meaning of wu wei is "without action". It is often expressed by the paradox wei wu wei, meaning "action without action" or "effortless doing". The practice and efficacy of wu wei are fundamental in Taoist thought, most prominently emphasized in Taoism. The goal of wu wei is alignment with Tao, revealing the soft and invisible power within all things. It is believed by Taoists that masters of wu wei can observe and follow this invisible potential, the innate in-action of the Way.”

How come invisible hand is not able to let free market reach the most ideal stage? How come wu wei can not bring one to the philosophical stage of harmony Dao?

In the way to free market stage of most mutually beneficial benefits, there are many obstacles, and the most important one is the value system and moral behaviour. We have given a free hand to the financial market to develop. However, the investment bankers ignore their social responsibilities that lead to Global Financial crisis.

Similarly, how can one reach the harmony state of Dao when one only thinks of hate, greed, zealous, and angry? One does not have enough De, how to talk about Dao?

So, it all goes back to the basic – the fundamental of being good.