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Supply and Demand

Quote 648-649

Prices are by far the most neglected form of knowledge we have. Although some economic literature stresses the importance of prices, the knowledge-disseminating function of prices is largely unknown—or, if known, then widely ignored—in political and legal theory. The reason for this is that the knowledge embedded in prices is not explicit; we are never conscious of it as knowledge. It is encoded knowledge, and we are conscious only of the code.
Prices reflect the vast personal and local knowledge of the many competing uses to which any physical resource may be put. My computer is constructed of plastic, glass, various metals, and other resources. My desk is made of wood. These resources could have been used in a variety of other ways by people throughout the globe. I have not the slightest way of knowing even a small fraction of the specific alternative uses that others might find for these resources.

   --  Randy Barnett

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