Friedrich A. Hayek On The Price System
For more details on this topic, see Price signal.Austrian School economist Friedrich A. Hayek argued that a free price system allowed economic coordination via the price signals that changing prices send, which is regarded as one of his most significant and influential contributions to economics.
From "The Use of Knowledge in Society"...'The price system is just one of those formations which man has learned to use (though he is still very far from having learned to make the best use of it) after he had stumbled upon it without understanding it. Through it not only a division of labor but also a coördinated utilization of resources based on an equally divided knowledge has become possible. The people who like to deride any suggestion that this may be so usually distort the argument by insinuating that it asserts that by some miracle just that sort of system has spontaneously grown up which is best suited to modern civilization. It is the other way round: man has been able to develop that division of labor on which our civilization is based because he happened to stumble upon a method which made it possible. Had he not done so, he might still have developed some other, altogether different, type of civilization, something like the "state" of the termite ants, or some other altogether unimaginable type'...Friedrich A. Hayek
Read more about this topic: Price System
Famous quotes containing the words price and/or system:
“One has to have run a household before one can know the price of rice and firewood, and one has to have raised children before one can understand a parent’s love.”
—Chinese proverb.
“The truth is, the whole administration under Roosevelt was demoralized by the system of dealing directly with subordinates. It was obviated in the State Department and the War Department under [Secretary of State Elihu] Root and me [Taft was the Secretary of War], because we simply ignored the interference and went on as we chose.... The subordinates gained nothing by his assumption of authority, but it was not so in the other departments.”
—William Howard Taft (1857–1930)