Capitalism works on the principle that people do what is in their best interest.
I think we can pretty much count on that. Even left wing liberals pay as little as they can for what they purchase.
So, in the absence of monopoly and collusion (competitors acting like a monopoly) the market price for any commodity will be no higher than what someone is willing to pay.
The beauty of this simple model is that you end up with many players on the supply and demand sides negotiating a price with no other forces at play than self interest.
Is it possible that a board or government agency can do a better job managing the market than capitalism? Let`s just look at the dimensions of the problem.
- How many products/services are being provided in our economy?
- How many buyers and sellers are there?
- What are all the relationships between products?
- What are all the relationships between buyers and sellers?
- How about the differences between sellers of the same product?
- How about the differences between buyers of the same product?
- How about timing issues - when things are bought and sold?
Considering the number of variables in the equation it is clear that no board or government agency can manage an economy of the size of the U.S. economy. Any attempt to do so is likely to confuse the market, create spikes in both directions and lead to corruption as major market players attempt to guide policy in their best interest.
Get out of the way, government!