Consumer demand is the aggregate result of the economic value-judgments of all the individual consumers. Thus, it is the values of individuals, expressed through their demand for various products, which cause the market to be what it is at any given time. – Market for Liberty, 1970
A free market is inherently demand-driven, with demand expressed through price, which functions as units of purchasing power. Price serves as a unit of account, enabling participants to compare and select supply within the market. This process allows resources to be allocated efficiently, ensuring that work energy flows where it is most needed.
Price as Energy and Work Potential
Participants in a free market naturally learn to evaluate and judge prices, which ultimately represent energy — the ability to do work. When we express demand, we are effectively initiating the actualisation of some of our stored generic work ability. The ability to store and deploy work ability over time is made possible by the unit of account (UoA) mechanism, which in turn facilitates specialisation and division of labour.
The Use-Case of Price: Facilitating Fair Exchange
The purpose of price is identical to the purpose of the market itself — to facilitate exchange, and more specifically, to facilitate fair exchange that contributes naturally to the collective equilibrium process. A functioning market is not merely a mechanism for individual gain but a self-organising system that ensures resources and attention flow where and when they are needed most.
A well-functioning market operates as a public space of shared exchange, allowing market participants to distribute resources efficiently based on price signals.
The Moral Dimension of Exchange
One of the most valuable feedback mechanisms in any system comes from purely self-interested, well-informed, and properly embodied action. This is because rational self-interest is the only universally valid motivation across all rational actors.
Fair exchange is the most moral form of exchange because it ensures that no party is being coerced or engaging in self-sacrifice in the process. Any deliberate deviation from this optimal direction — whether through manipulation, coercion, or artificial constraints — is an immoral act that distorts natural equilibrium.
Equilibrium as a Dynamic Attractor
For the market to function most effectively, fair exchange should be an emergent property of rational self-interest. In an unmanipulated market, price information must remain undistorted to allow it to flow freely toward equilibrium. The market naturally self-corrects as competing pressures refine pricing, ensuring that resources and labour are directed toward their most productive uses.
However, it is essential to understand that equilibrium is inherently imperfect — it is not a static endpoint but a direction toward an ideal. The ideal acts as an attractor, a goal that is continuously approached but never fully reached. A free market does not create a perfect state — it creates an ongoing process of refinement.
Feedback acts like a price signal
In the holarchic context, the role of price information is played by the feedback in the holons two loops, the usage metrics in the activity loop and the selection in the organisational loop.
A well-designed holarchic system must ensure that information flows freely to enable this self-organising dynamic equilibrium. Similar to the market mechanism, there must be disincentives for deliberate unfair exchange, whether in the form of coercion, manipulation, or self-sacrifice. By maintaining clear, undistorted feedback, a holarchy — like a free market — naturally orients itself toward optimal organisation and adaptation over time.