Sustained economic growth requires more than inputs. It requires efficient organization. Recent economic history has proven that markets are a much more efficient institution for allocating resources and designing production and distribution systems than are governments. The Importance of Markets For half a century, from the 1920s into the 1980s, an Austrian-born economist and social philosopher named Friedrich Hayek wrote about the wonders of markets. First, markets provide the incentives necessary for people to use resources efficiently.
Entrepreneurs seek profits.
They attempt to use the resources at their disposal to produce the goods and services that consumers value most highly. By doing so, the entrepreneurs earn the maximum profit. When consumers preferences change, so does the pattern of demand. Entrepreneurs shift resources into producing the goods consumers want. The economy prospers.