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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