The state --the machinery and power of the state-- is a potential resource or threat to every industry in the society. With its power to prohibit or … - George Stigler

A modern economic system is of extraordinary complexity. Imagine a three-dimensional jigsaw puzzle, consisting of roughly 100 million parts. Some parts touch against, let us say, 1,000 other parts. (That is, each family deals at one time or another with that many employers, banks, retail stores, domestic servants, and so on.) Other parts touch—let us be conservative—50,000 other parts (firms that sell to retailers and buy from other firms and hire laborers and so on). It would be enough of a task to fit these 100 million pieces together, but the real difficulties have yet to be mentioned. The pieces change shape quite often—a family has twins; a firm does the next best thing and invents a new product. The economist has the interesting task of predicting (in the aggregate) each of these movements. Meanwhile a busy set of people—congressmen, members of regulatory bodies, central bankers, and the like—are changing the rules on who or what the jigsaw pieces will be and how they are shaped. And of course there are other jigsaw puzzles (foreign economies) of comparable complexity, and these other puzzles are connected at literally a million points with our puzzle.

A rational man must be guided by the incentive system within which he operates. No matter what his own personal desires, he must be discouraged from certain activities if they carry penalties and attracted toward others if they carry large rewards. The carrot and the stick guide scientists and politicians as well as donkeys.

Prices instruct us on what people desire, but prices do not tell us why those things are desired. Our desires are accepted as a datum by economists: desires are some amalgam of biological needs, the cultural values of the society in which we grow up, and our own experiments.