Friedrich Hayek developed a revolutionary concept of price that goes far beyond the traditional view of mainstream economics. While the conventional approach sees price as a simple mathematical result of the equilibrium between supply and demand in a framework where information is uniformly distributed, Hayek proposes a radically different perspective. For him, price is above all a signal that conveys essential information and coordinates individual actions without the need for central intervention. This theory, set out in his seminal 1945 article "The Use of Knowledge in Society", represents one of the major contributions of the Austrian school of economics.

The price system helps to maintain what Hayek called the extended order, the spontaneous social order that human beings have naturally put in place to coordinate and cooperate effectively in a free market. Hayek saw this system as a complex and crucial communication network that condenses information on the wants and needs of millions of individuals. This vision transforms our understanding of the economy, presenting it as first and foremost an economy of knowledge.

According to Hayek, information is never available to all individuals. It is always dispersed, incomplete, imperfect and constantly changing. As a result, all individual economic decisions are ultimately speculations based on limited information. The price system makes it possible to coordinate these actions despite this dispersal of knowledge, by transmitting universally understood information on the relative scarcity of goods.

The most significant aspect of the price system is the economy of knowledge it enables. Market participants need only a minimum of information to make the right decisions. The most essential information is transmitted only to the agents concerned, and price alone is enough to steer market forces in the right direction. An economic player doesn't need to know why the price of a good is rising. He simply needs to observe this increase to adjust his behavior, whether by saving the good, looking for substitutes or producing more of it.

Hayek illustrates this mechanism with his famous example of the tin mine. Suppose a new use for tin appears on the market, or a source of production disappears. Tin then becomes more in demand as its supply becomes scarcer. Tin users don't need to know the cause of this scarcity. They simply observe that the price is rising, and this signal is enough to inform them that they need to save tin, look for substitutes or innovate to use less of it.

If only some of the players are directly aware of the new demand and allocate resources to it, the process will quickly spread to the entire economic system. It will influence not only all uses of tin, but also those of its substitutes, the substitutes of its substitutes, and so on. The vast majority of those who adjust their behavior will know nothing of the root cause of these changes. Through numerous intermediaries, information is communicated to all without any central authority having to coordinate these millions of adjustments. The price system spontaneously accomplishes what no planner could.

Friedrich Hayek formulated a striking idea concerning the efficiency of the price system. The simple fact that there is a price for every good determines a solution which, from a purely intellectual point of view, would have been the one arrived at by a single agent in possession of all the information dispersed among all the agents. This observation captures the essence of the price signal and reveals the impossibility of central planning, since no planner, however skilled, can access the dispersed information that the price system spontaneously aggregates.

When the state intervenes and manipulates prices, it disrupts this communication network and sends false signals to the market, leading to a misallocation of capital. Economic players guided by these manipulated prices make decisions based on distorted information. They invest in sectors that do not correspond to real consumer preferences, overlook profitable opportunities and waste scarce resources. The more freely prices are set, the more efficiently capital is used. According to Hayek, institutions such as private property and the price signal guide the market as a whole, and should therefore not be manipulated but preserved as far as possible.