Are ‘Greedy Capitalists’ to Blame for Rising Prices?

Zohran Mamdani is running for mayor of New York City on a platform that focuses on lowering prices. Polls show him leading the pack in a multi-candidate race.

Some of Mamdani’s popularity can be attributed to frustration with rising prices. A 2025 poll of New York City residents found that “62% say it is increasingly difficult to meet the basic costs of living like food, healthcare, housing, and education” and “nearly one in three New Yorkers said they or someone they know had to move in with a family member to save money in the past few years.” Prices—especially grocery prices—are running rampant in NYC.

Mamdani’s platform includes a plan to create a network of city-owned grocery stores. By eliminating the profit motive, Mamdani claims, prices can be kept lower.

This concept—to the great misfortune of millions over the last 100 years—has already been tried. And it has failed every time.

Just ask Venezuelans, whose country’s quarter-century flirtation with socialism has been an abject disaster. For ordinary citizens in the oil-richest country on Earth, it’s a struggle just to put food on the table.

Similar policies brought down the Soviet Union. Have you seen the pictures of Soviet bread lines? The black market is what helped people survive. Sure, products were more expensive on the black market, but, in contrast to official stores, at least they were available.

Despite overwhelming evidence and economic data, many countries have not learned the hard lessons of the Soviet Union or Maoist China and continue to impose direct and indirect price controls. Venezuela and Cuba are obvious examples, but in recent decades, elements of price control have also quietly expanded in the European Union and the United States.

Apparently, we have to learn this the hard way. Again.

Economic Coordination

Who controls the world economy? Who ensures that people have a roof over their head and food on their table?

There’s no single command center in the world, no central brain, no all-knowing miracle, no committee dictating who should grow tomatoes (at least not yet, though some politicians certainly do keep trying to engage in central economic planning, despite its unbroken record of failure). And yet, somehow, despite the lack of central command over the economy, people’s needs are met. Houses are built. Food is grown.

No one manages the process. No one forces producers to produce, and yet they do.

Why? Why do they produce even though no one orders them to? How do they know what to produce even though no one tells them to?

There is a miraculous, all-knowing force, but it’s not a person or a committee. It’s prices. A sophisticated, organic system of prices provides the incentives and the information producers need.

Human desires are unlimited. Resources, on the other hand, are not. Which resources should we use to fulfill which human desires? How much of each? Where should they go?

An economy is an incredibly complex system—far too complex for any body of central planners to steer successfully. No bureaucrat, or group of bureaucrats, can possibly compute all the factors that create an economy. No central planner can coordinate the trillions of decisions made every day.

Fortunately, we don’t need a centralized commission to coordinate market activities. We have prices.

Prices are the language of wants and means; they coordinate consumers and producers. They show what people want, and how badly. They reveal what’s scarce, and by how much. At the same time, they guide consumers where to spend and producers where to focus their efforts.

Specialization and Equilibrium

Around 10,000 to 15,000 years ago, humans stopped roaming and began to settle. We also began to specialize. Some focused on growing crops; others raised livestock. But what if the crop farmer wanted some meat?

The answer was barter.

Although specialization and barter were a step towards greater prosperity, we can also see in hindsight how barter created new problems. How many sacks of grain is a cow worth? Eventually, our ancestors found a real solution: money and, with it, prices.

Once people began using shells, stones, and eventually precious metals as currency, we were able to price goods and services. This allowed for further specialization.

At first, progress was slow. It was in the last three centuries that humanity truly leapt forward, unlocking unimaginable wealth.

When prices are allowed to form freely, excess supply drives them down, incentivizing producers to make less and consumers to buy more. When supply is tight, the opposite happens. An equilibrium of production and consumption is established.

But when central planners control prices, under- and overproduction are inevitable. When price signals are distorted, waste and shortages become the norm.

Still, for over a century, many have failed to grasp that allowing prices to form organically is indispensable for prosperity. Communism is to blame for the deaths of more than a hundred million people over the last century, and price controls are at the heart of this draconian system. Yet some still claim to yearn for a socialist system.

Astronomical Prices

The free formation of prices is indispensable for a wealthy civilization. Prices send a clear message: “Resources are better used here than there.”

Free price discovery is a foundation of progress. It directs innovation.

The price of any new product is high, and often astronomical. Fifty years ago, the IBM 5100 Portable Computer—one of the first “modern” computers—cost $8,975 (about $42,000 today). It weighed 50 pounds and could hardly do anything a modern computer can.

Today, you can get a pocket-sized device with far more power for under $200.

Such developments don’t happen because of government programs. They occur because high prices indicate to potential manufacturers that strong demand exists. Hence, producers race to build better solutions at ever-lower prices.

Of course, every producer would love to keep prices high and pocket the profit, but competition forces them to lower their prices.

Unfortunately, even in our so-called free economies, price signals are constantly tampered with. Price controls, subsidies, tariffs, and mandates distort the signal. They all block markets from directing resources to where they’re needed most.

If the hand of government isn’t too heavy, providers can supply many of the desired products and services. But they cannot do it as efficiently. Resources get wasted. Rent controls prevent new houses from being built. Farm subsidies stimulate the production of plants nobody asked for. Ever hear of high-fructose corn syrup?

Prices are only the signal. If you want to bring them down, you need to increase supply. Destroying the signal will not help. Crushing your thermometer will not lower the temperature.

The Ultimate Aggregator

Next time you stand in front of a price tag, take a second to appreciate everything it reflects.

The price of that cup of coffee at your local café aggregates an astonishing amount of information: the weather conditions faced by a farmer in Brazil, the cost of his land, the maintenance of his equipment, the cost of shipping the beans around the world, the price of the milk, the labor of the barista, the rent and electricity of the café—and maybe, just maybe, a sliver of profit.

Additionally, every step along the way is affected by some form of government interference.

But you don’t need to know any of that. You simply see the price and decide if it’s worth it to you to buy that cup of coffee at that moment.

As if that weren’t enough, all of that information is constantly adjusting to meet new conditions. The weather changes, production costs change, and governmental regulations change as well.

No central committee—heck, no supercomputer—could ever calculate the ‘right’ price of anything, even for a moment, let alone update it in real time. It’s simply too much for any central authority to handle. The free market, however chaotic it may seem, handles it every second.

An Intelligent System

Prices are a miracle of distributed intelligence. They compress billions of data points into a single signal you can use to make a decision.

This system needs no minister, no mandate, no master. It arises from billions of choices, and in return, it informs billions more. It ensures that needs are met before you even know you have them.

Free prices may be the most sophisticated information system ever to emerge from human action. And no one designed it. It emerged, and continues to emerge, naturally, when free individuals are left to make free decisions and engage in voluntary exchange.

Liberty-loving people do not defend the free formation of prices because they love profit. They do it because they understand how vital this system is to human flourishing.