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You could say that the market is itself the mechanism that calculates the equilibrium. (But it could be a pretty falsehood: not an economist.)
by Kinrany 7y ago
You could say that the market is itself the mechanism that calculates the equilibrium.
(But it could be a pretty falsehood: not an economist.)
- greggyb 7y agoThis is a good way to think about it. Certainly more helpful than many other short explanations I've seen attempted. Am not economist, but do have econ degree. Edit for slight clarification: The phrasing suffers from anthropomorphizing a thing. The market is a collection of human interactions. Humans are the agents. The market is an amalgamation of many individuals acting as they best see fit, utilizing their local knowledge. The sum of these actions and interactions performs the calculation. Same idea, just clarifying where agency exists.