Chapter 7. Consumers, Producers, and the Efficincey of Markets

• One of the ten principals of economics listed in Chapter 1 is "Markets are usually a good way to organize economic activity." In this chapter we have seen how a competitive market can maximize total surplus. But could a benevolent social planner, who knew producers' costs and consumers' willingness to pay, do just as well as the market?
  Until the collapse of the centrally planned economies of Russia and Eastern Europe in the 1980s and 1990s, the efficiency of markets versus central planning was a very real question. A farsighted 1945 essay by Austrian economist   Friedrich Hayek, arguing that real-world central planners could never gather and use all the information that markets gather and use, can be accessed at http://www.econlib.org/library/Essays/hykKnw1.html.