Defenders of free markets argue that, compared with the alternatives, the
decentralized market system is more flexible and adjusts more quickly to
changes.
Suppose, for example, that the world price of oil rises, which then
increases the prices of heating oil, gasoline, and electricity. One
household might prefer to respond by maintaining a high temperature in
its house and economizing on its driving; another household might do
the reverse. A third household might give up air-conditioning instead.
This flexibility can be contrasted with centralized control, which would
force the same pattern on everyone, say, by rationing heating oil and
gasoline, by regulating permitted temperatures, and by limiting air-
conditioning to days when the temperature exceeded
Furthermore, as conditions continue to change, prices in a market
economy will also change, and decentralized decision makers can react
continually. In contrast, government quotas, allocations, and rationing
schemes are much more difficult to adjust. As a result, there are likely to
be shortages and surpluses before adjustments are made. A free market
provides automatic signals as a situation develops so that not all of the
consequences of an economic change have to be anticipated and allowed
for by a group of central planners. Millions of responses to millions of
changes in thousands of markets are required every year, and it would be
a Herculean task to anticipate and plan for them all.
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