"While markets coordinated by price movements – “capitalism” as it is called – may seem like a simple thing, markets are misunderstood more often than some other things that are considered more complex. Although a free market economic system is sometimes called a profit system, it is in reality a profit-and-loss system – and the losses are equally important for the efficiency of the economy, because losses tell producers what to stop producing. Without really knowing why consumers like one set of features rather than another, producers automatically produce more of what earns a profit and less of what is losing money. That amounts to producing what the consumers want and stopping the production of what they don’t want. Although the producers are only looking out for themselves and their companies’ bottom line, nevertheless from the standpoint of the economy as a whole the society is using its scarce resources more efficiently because decisions are guided by prices."
Thomas Sowell
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