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Quotation of the Day…

… is from page 952 of my emeritus colleague and 2002 Nobel laureate Vernon Smith’s important December 1982 American Economic Review paper, “Microeconomic Systems as an Experimental Science”:

At the heart of economics is a scientific mystery: How is it that the pricing system accomplishes the world’s work without anyone being in charge? Like language, no one invented it. None of us could have invented it, and its operation depends in no way on anyone’s comprehension or understanding of it. Somehow, it is a product of culture; yet in important ways, the pricing system is what makes culture possible. Smash it in the command economy and it rises as a Phoenix with a thousand heads, as the command system becomes shot through with bribery, favors, barter and underground exchange. Indeed, these latter elements may prevent the command system from collapsing. No law and no police force can stop it, for the police may become as large a part of the problem as of the solution. The pricing system – How is order produced from freedom of choice? – is a scientific mystery as deep, fundamental, and inspiring as that of the expanding universe or the forces that bind matter.