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Milton Friedman on Prices and what they do

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.
Free to Choose
Book, 1980, Ch. 1 "The Power of the Market", p. 14
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  1. I'm not in favor of no government. You do need a government. But by doing so many things that the government has no business doing, it cannot do those things which it alone can do well. There's no other institution in my opinion that can provide us with protection of our life and liberty. However, the government performs that basic function poorly today, precisely because it is devoting too much of its efforts and spending too much of our income on things which are harmful.
    Interview with Milton Friedman
    Interview, 1992, Federal Reserve Bank of Minneapolis, The Region, Interview by David Levy, June 1, 1992
    Checked against the sourceRead the transcript
  2. None of this means that government does not have a very real function. Indeed, the tragedy is that because government is doing so many things it ought not to be doing, it performs the functions it ought to be performing badly. The basic functions of government are to defend the nation against foreign enemies, to prevent coercion of some individuals by others within the country, to provide a means of deciding on our rules, and to adjudicate disputes.
    Why Government Is the Problem
    Journal article, 1993, Hoover Institution Press, Essays in Public Policy no. 39, p. 6
    Checked against the sourceRead the original
  3. The price system transmits only the important information and only to the people who need to know.
    Free to Choose
    Book, 1980, Ch. 1 "The Power of the Market", 15
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