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Card 7 / 19: *Why doesn't a market economy suffer from the same calculation problem that plagues the socialist planners?
Answer:
The market overcomes the calculation problem because no one group is "in charge" who needs to decide everything. The decisions are instead dispersed among all the owners of producer goods (including labor). The profit and loss test, as revealed by market prices, guides the owners when they decide how to deploy their resources.
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Dr.Robert MurphyAssociated Scholar
Mises Institute
USA
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Attribution:
Dr. Robert P. Murphy, Lessons for the Young Economist. (Mises Institute), http://mises.org/document/6215/Lessons-for-the-Young-Economist (Accessed 04 April, 2014). License: Creative Commons BY
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