A few months ago Bill O’Reilly, conservative Fox News pundit and denizen of the far right, had John D’Agostino, the vice president of the New York Mercantile Exchange, on his show. O’Reilly asked D’Agostino who it is that sets the price of oil. When D’Agostino's (correct) reply came that no one person does, that it’s the market, O’Reilly shows some impatience and insists that someone has to be setting it. A transcript of the full interview is here.
It’s true that a market economy can be a confusing thing. I’ve often looked at the trading floors of stock exchanges and asked myself how such seeming chaos can determine prices and ultimately drive our economy. Yet it does, because that is how capitalism works; not through one person setting the price, but through a complex system of exchange.
Bill O’Reilly’s mistake about the power of one person to set the price may be a momentary confusion about the magic and chaos of the market we have all faced, or, as I have often speculated, evidence that those that expound the greatness of the free market the most often don’t understand how it actually works, or what it needs to work.