affect the underlying forces of demand and supply, and this can have serious repercussions. During China’s
104 4 • Labor and Financial Markets

“Great Leap Forward” in the late 1950s, the government kept food prices artificially low, with the result that 30

to 40 million people died of starvation because the low prices depressed farm production. This was communist

party leader Mao Zedong's social and economic campaign to rapidly transform the country from an agrarian

economy to a socialist society through rapid industrialization and collectivization. Changes in demand and

supply will continue to reveal themselves through consumers’ and producers’ behavior. Immobilizing the price

messenger through price controls will deprive everyone in the economy of critical information. Without this

information, it becomes difficult for everyone—buyers and sellers alike—to react in a flexible and appropriate

manner as changes occur throughout the economy.

BRING IT HOME
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