The other great accomplishment of markets is that they reconcile the choices people make for themselves with the choices other people are making. Back at the dinner table we find that no Planner is necessary to process the enormous amount of information that is required to decide how much pasta, rice, cheese, and takeout cuisines of various cultures to supply to the people of New York. This great achievement of markets is achieved through Searchers. The suppliers search for customers, the customers search for suppliers, and the price adjusts up or down to equate supply and demand. So the market determines prices and quantities to reconcile the needs and abilities of suppliers and consumers. The price reflects both the additional cost that the supplier incurs to supply an additional item and the additional benefits that the customer gets from purchasing one more of each item. Hence, the market matches the additional cost to society of producing each item to the additional benefit to society of consuming that item. The market comes up with a basket of commodities produced at the lowest possible price for the highest possible benefit.
-William Easterly (The White Man’s Burden)
