Emphasis mine:
The number of technologically feasible ways to produce any desired good in a modern economy is virtually infinite, but the subset of these which represent production methods that are also relatively economical is much smaller. Without the benefit of a price system, decision-makers who are faced with the bewildering variety of technologically possible methods of production would hit upon a set of economically feasible methods only by the most bizarre accident. The likely outcome of production that is carried on in the absence of price guidance is that so little would be produced that society would revert to the simple methods of primitive societies.
Thus the aid provided by prices is a reduction in the overwhelmingly numerous possibilities of production methods to a handful that appear profitable ex ante. Of course, only some of these will, as prices continuously change, actually prove profitable ex-post and thus survive through time as regularly employed habits of producers. But by reducing to a manageable size the mind-boggling variety of conceivable methods of production, the price system performs an indispensable service.
-Don Lavoie (“The Market as a Procedure for Discovery and Conveyance of Inarticulate Knowledge)
Prof Don Boudreaux adds the following concerning bureaucrats and politicians ignoring price and only considering “Industrial Policy” (as Biden and Congress have concerning semiconductor manufacturing) and again, like so many other countries “leaders”, they fall prey to the Great Mind Fallacy:
This reality is missed by advocates of industrial policy. By proposing to allocate large quantities of resources by diktat and, hence, in opposition to the manner in which those resources would be allocated by the price system, industrial-policy advocates imagine that, by some miracle, industrial-policy mandarins will somehow know how to allocate those resources in ways that result in better economic outcomes than are achieved by the price system. Industrial-policy advocates never tell us just how industrial-policy mandarins will obtain all the necessary detailed information and knowledge they must obtain in order that these mandarins might have some reasonable prospect of improving the living standards of ordinary people over time.
This is otherwise called Socialism and Communism where top-down decisions are often made for political reasons (or, at least underpinnings that have no basis in economics) thinking it will improve that country’s status in the world (and often never caring about the Individual).
The Price System doesn’t care about the micro or macro levels – it only cares about one small piece of data – what does an item cost to make or deliver, and how can an ROI be built into that price such that consumers will think it is a good value for them (either by a company or an individual) and pay for that item. This happens all up and down the supply chain.
Being a capitalist Society, price is everything and it has proven valuable, especially against those that don’t.
(H/T: Cafe Hayek)
