Price, the Peaceful Regulator; C. W. Anderson

c. W. ANDERSON ...-.-...-..5) gu\a.\O{ "GAS TRUCK DRIVER SHOT AND KILL ED ON TOLLWAY," screamed the headline! The second line could have been "... as he was delivering goods on a contract made voluntarily and peacefully between two parties." How come the violence and third party interest here? A good ques tion! But, actually, the killed was the fourth party of this transac tion - a third party having previ 0usly declared an interest in it. The third party was the Govern ment, which had ruled that prices for certain products and for de liveries must have Government ap proval. In effect, two parties who would normally work out a free market price agreement to their mutual advantage were prohibited Mr. Anderson is President of the Employers Association in Milwaukee. from doing so ... and in the proc ess, many felt their rights were infringed and that violence was required to correct the injustice.

Such actions, which take' the law into the a.ggrieved party's hands, are never justified, of course, but they dramatize the fact that vio lence in the exchange of goods and services (the market place) is almost always a result of a third party enforcing its decree or de mand. Normal two-party exchanges are nonviolent because of a won derful economic tool: price, the peaceful regulator. A free-market price is reached by a very compli cated, computer-like weighing of a va.st number of factors which include not only costs but personal buyer preferences, other attrac tions for the buyer's dollars, an265 266 THE FREEMAN May ticipated competition, and the like. When we understand how this process works, we will see our own business and personal activi ties in clearer focus. Also, what is happening in the current energy shortage will be more under standable ! It Takes Two to Trade An example close to all of us may illustrate how this tool works.

If we will ask ourselves how much our own services and time are really worth, we'll find that an honest answer is elusive - actually impossible. This is because our judgment is never the only factc,r in the determination of this price. There is always the value someone else, the buyer (employer), places on our services. As great as we may sometimes think we are, our effective price is not at that high level unless a buyer agrees with us. Only in a system where a dictator or a law sets an arbitrary price is our compensation deter mined without an agreement be tween a buyer and ourselves (seller) . Precisely the same is true of all products and materials. Just as you and I try to get "aU the traf fic will bear" in selling our time and services, so the merchant does this for his goods and the manu facturer for his "widget." And, this is as it should be because all the buyers of our services, or "widgets," try to pay as little as possible for these. The net result of these "conflicting" objectives is a willing, uncoerced exchange by mutual agreement ... with no con flict. Even when the buyer and seller don't agree, no violence oc curs - each simply seeks a seller or buyer elsewhere. No headlines; no one else even aware of what has happened.

Today, third-party interference is all about us working both subtly and with open violence; in either instance force, or the threat of it, hovers over voluntary, peaceful exchange arrangements. The-dang er in this is that we tend to be expedient, to adj ust to each new third-party interference, soon ac cepting it as normal. As evidence, consider only the growing normal cy of teacher strikes and the al most complete acceptance of con trolled interest rates and plane fares. But as we embrace each new third-party interference, our vi sion of a free market blurs and the ideals and the miraculous efficiency of a free, peaceful econ omy become more remote. Free-market pricing is, indeed, a kind of miracle-when we con sider the billions of exchanges made peacefully every day in our economy. Without it, the "energy erisis" will eontinue! Without it, no economy can survive! t) THE FACT that the nation's "crises"