Wealth & Money Quote by Michael Polanyi

Polanyi is smuggling a moral defense of the market into what reads like a clinical description of “information.” The key move is that he treats prices as a language: not a number slapped onto a thing, but a constantly updated signal that lets strangers coordinate without sharing a boss, a plan, or even a worldview. That framing matters because it recasts capitalism less as greed’s playground and more as a communications technology - an impersonal system that turns dispersed, local knowledge into actionable cues.

Then he twists the knife: prices don’t merely inform; they discipline. The “incentive to exercise economy” is a polite way of saying the market coerces restraint. If you waste resources, you pay. If you allocate them shrewdly, you’re rewarded. Polanyi’s subtext is that this pressure is not a bug but the feature that makes coordination durable. Without the bite of money, information stays academic; with it, you get behavior.

The context is mid-20th-century anxiety about central planning and the dream that experts could replace the messy churn of markets with rational design. Polanyi, a scientist who spent his life thinking about tacit knowledge, is pushing back: planners can’t know what millions know in fragments, and they can’t replicate the real-time feedback loop that prices provide. The line is also a quiet rebuke to intellectuals who want the benefits of coordination without the discomfort of constraint. Polanyi’s wager is that freedom at scale requires an unromantic mechanism, and that mechanism is the price.