The Mind of the Market
Here’s a fine paragraph from page 67 of Pietra Rivoli’s wonderful 2005 book, The Travels of a T-Shirt in the Global Economy:
Americans, and now Russians and Slovaks and Chinese, disdain such central planning for its inefficiencies. A system that ignores market signals, that provides no incentives, that subsidizes losers cannot be efficient in producing goods and services. Central planners will produce the wrong goods, use the wrong inputs, set the wrong prices, hire the wrong people, and ultimately produce shoddy products, and not enough of them, anyway. But to meet [Chinese textile-mill manager] Tao [Yong Fang] in the Number 36 factory is to realize that the real tragedy of central planning lies not in its inefficiency but in its crushing of the intellect, of 20 years of Tao’s energy and intelligence laid to waste. For 35 years the spindles in the Number 36 mill clattered, and no one working in the mill had to decide anything. So today there is determination but bewilderment as Tao faces the basic questions of running a business rather than turning a cog: what to produce, where to sell, whom to hire, what to pay? [original emphasis]
Beautiful — both the explanation and the humanity-building capacity of markets.