A simple price tag. That’s all it takes to summarize ALL of the inputs from the design, development, sourcing, purchasing, manufacture, marketing, sales, shipment, delivery, accounting, and customer service of and for a product.
Most economic analysis treats uncertainty as a factor that prevents the creation or diminishes the efficiency of markets. Austrian analysis treats markets as one response to uncertainty. Markets permit individuals to act on their limited information, to receive feedback, and to discover and communicate knowledge to others. The market price system is a way to summarize and transmit information in a swift and flexible way to the people who would be most interested.
-Jerry Ellig (Dynamic Competition and Public Policy)
A countless number of hands, meetings, headaches, workarounds from one to many entities providing everything that is needed for that product without necessarily knowing what it is that THEIR product is going into.
A product/service price point neatly summarizes all of that effort – all that is necessary for Capitalism to succeed is for consumers to believe that price signal is of sufficient value to THEM (on the demand side) and complete the voluntary transaction.
This signals the Supply-side to make more because people value it.
Or, if that price point is refused, either revise the product and all the efforts behind it to establish a new price – or figure out that the market doesn’t want the product – and capital (both financially and human) will go elsewhere and work on something that the market WILL accept.
FAR better than some far removed bureaucrat deciding what you want and what you will pay for something. Because they just aren’t smart enough to do that better than a single price point.
And yes, this is a bit of a reminder of “I, Pencil” here. Or, as Socialists hate to hear: “Spontaneous Order”; the heavy hand of government is not needed to “guide” or “nudge” those that are already working in their self-interest or as those same Socialists say: “Selfishness.”
You see, the Socialists can’t stand the fact that the vast majority of us can live our lives well (thank you, very much) without them. In fact, as History shows, prosperity follows the Arc of Freedom (to quote that Gawd-awfully stupid phrase of theirs that “Justice follows the arc of history” (which it doesn’t as we are now seeing the Rule of Law (which DOES provide Justice) being ignored.
By having Freedom.
(H/T: Cafe Hayek)
