Producers in market economies have the incentive to provide the goods
and services that customers value, and the result is that line-ups rarely
exist in these economies. In the former Soviet Union, however, the
central planning system was very slow to respond, and line-ups like this
were very common.
Bettmann/Getty Images
A market system allows for coordination without anyone needing to
understand how the whole system works. Professor Thomas Schelling, who
was awarded the Nobel Prize in economics in 2005, illustrated this idea:
The dairy farmer doesn’t need to know how many people eat butter and how far away they
are, how many other people raise cows, how many babies drink milk, or whether more money
is spent on beer or milk. What he needs to know is the prices of different feeds, the
characteristics of different cows, the different prices... for milk... , the relative cost of hired
labor and electrical machinery, and what his net earnings might be if he sold his cows and
raised pigs instead.It is, of course, an enormous advantage that all the producers and
consumers of a country collectively can make the system operate—yet not
2