First, markets really do capture the voices of the people. Markets are, in F.A. Hayek’s words, communication processes. When we buy and sell — or refrain from doing so — we are sending messages to others about what we want and do not want, and what we’re willing to give up to get it. As I pointed out in “Who’s in Charge, Capitalists or Consumers?” (FEE.org, April 13, 2016), this idea of “consumer sovereignty” means that our choices as consumers drive the allocation of resources and the pattern of incomes in the marketplace. Prices, profits, and losses all reflect the combined voices of the people as expressed in our market decisions.
-Steve Horwitz (Charles A. Dana Professor of Economics at St. Lawrence University, Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions.)
(H/T: Cafe Hayek)
