Prices

Prices are what allows a complex, free market economy to function without an army of bureaucrats coordinating and directing supply and distribution of goods and services.

Individuals transact with each other based on mutually agreed terms. Prices convey these terms, not just between the individuals concerned but throughout the marketplace. A source of cheaper goods is soon discovered without the need for officials and committees to issue plans and orders.

Prices determine the quantity of resources that get used and how they are distributed.

Poor understanding of economics is a problem where political leaders coordinate economic activities, where in other countries, prices automatically do it.

Prices convey the scarcity or abundance of items, highlighting the reality of the situation.

The primary role of prices is to drive the use of resources and what products are produced. Manufacturers aim to produce goods that they can sell at a profit. Consumer demand will determine if the goods are wanted or not at the given prices. Losses tell producers to stop what they are doing and adjust to what consumers actually want.

In free markets, the movement of prices (up and down without caps) result in efficient allocation of resources. Millions of people and businesses keep track of prices that are relevant to them rather than a government agency trying to keep track of and control millions of prices by a handful of staff.