Milton Friedman on Free markets and the price system

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Topics

• Free markets and the price system32 passages
• Prices and what they do26 passages

He also said

1. “Prices perform three functions in organizing economic activity: first, they transmit information; second, they provide an incentive to adopt those methods of production that are least costly and thereby use available resources for the most highly valued pur poses; third, they determine who gets how much of the product—the distribution of income. These three functions are closely in terrelated.”

2. “The most important single central fact about a free market is that no exchange takes place unless both parties benefit.”

3. “The Chilean economy did very well, but more important, in the end the central government, the military junta, was replaced by a democratic society. So the really important thing about the Chilean business is that free markets did work their way in bringing about a free society.”