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The Vital Role of Prices

The legend says that in the 1980’s a Soviet official asked economist Paul Seabright who was in charge of London’s bread supply. The economist answer was, ‘nobody’. That’s of course true, there’s no single person in charge of the supply of essential goods in a market economy. The answer to that question is, as Leonard Read’s story “ I, pencil ” describes, a complex and intertwined network of people and businesses that delivers the amount of goods and services required. The main tool they all use to find out what’s required is the pricing signal. Prices are the most essential tool for the market economies and in most cases, they are not designed or controlled by a central authority or government, they are just the result of spontaneous order of dispersed market forces.   A simple form of vast knowledge Since economist Friedrich Hayek writings, prices have been seen as the free and efficient nature of market economies, before then nobody paid much attention to its nature, it w

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