Thoughts on Planning and Market Economics

A market has the advantage of resources being allocated to the most efficient producers. The resource allocation “mechanism” is sometimes called the “invisible hand” of the market. This phrase was coined by British economist Adam Smith in the eighteenth century. Through the individual and free choices of a large number of independent consumers, resources are allocated to the different producers of consumer products and services that produce the highest-quality products at the lowest cost and who, in their turn, purchase the machinery, material and services that best contribute to their success in the consumer market. Through supply chains, back to the producers of raw materials, the most efficient suppliers at each level, from a number of different perspectives, are selected by customers, who provide the resources that fuel the growth of these suppliers. This, in some situations, is a very efficient process.