"Adam Smith used the phrase “invisible hand” only once in “The Wealth of Nations,” and he probably didn’t mean to say what most people now think he said. But never mind: Today the phrase is almost always used to mean the proposition that market economies can be trusted to get everything, or almost everything, right without more than marginal government intervention."
But I wouldn't be so quick to the "never mind" part. It does, in fact, matter that people misinterpret Smith; if nothing else, it lends some pretty hefty intellectual chops to the modern version of the "invisible hand" when those misusing it have someone like Smith "on their side." After all, economics is also a rhetorical discipline - persuasion, beliefs, and appeals to authority (and what greater authority is there in economics than Adam Smith?) all matter for economics. This is especially true in the policy discussions where Smith's name is frequently invoked.
Smith, as Krugman noted, used the phrase "invisible hand" only once in reference to the tendency of people to prefer investing their money domestically rather than abroad:
"As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it."
This is not a theory of markets, but merely an observation about growth (not efficiency) effects of investing capital domestically. It was not an early version of the First Fundamental Welfare Theorem, despite claims to the contrary.