Thursday, March 6, 2014

Without the Market Who Decides Exactly How Much People "Need"?

The market communicates to us through price signals. Prices tell entrepreneurs what people want, and what they don't want.

Answer me this, who decides exactly how much people "need," without the market? Should we measure all of the oil on Earth, and then divide it equally amongst everybody? Well, what if not everyone wants it? What if not everyone can afford it? And how do we know our measurements are accurate? What if we overestimate or underestimate the amount of oil?

The market, through price signals, sorts out these issues. Let's use the example of oil. If the supply of oil was low, oil prices would naturally rise. Consumers would then naturally cut back on oil consumption, to save money. If prices remained high, there would be a demand for an alternative form of energy. Businesses would then allocate their resources towards an energy source that was high in supply, and efficient.

How could the government, or any non-market source, perform this task any better? They have no price signal to guide their decisions.

From a forum thread: Common anti-capitalism critiques, smartly debunked

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