The Fashion & Style section of the New York Times has a recent story, "Tightening the Belt: Is This The World's Cheapest Dress?" The article tells the remarkable story of Steve & Barry's, a rapidly growing chain of clothing stores where all items sell for $10 or less. The article proclaims,

Fashion has surpassed music...as the retail touchstone of youth. And cheap fashion has become infinitely more respectable, even cool...

It helps that Steve & Barry's has teamed up with celebrity figureheads like Sarah Jessica Parker, Stephon Marbury, Amanda Bynes, and Venus Williams. The article also details many of the ways that the company obsessively cuts costs. The management philosophy is captured pithily by mantras like "fashion isn't luxury" and by focal points such as under pricing Wal-Mart. The article quotes co-founder Steve Shore:

“To be great, you have to have these ridiculous, insane prices, and not sacrifice quality,” Mr. Shore said. “The question we constantly ask ourselves is how to hit the price point that even Wal-Mart is not hitting.”

Okay, first of all I hate when people say price point. It's price, people. Just price! But second, I want to gush a bit and say that I admire and applaud these entrepreneurs. I can also vouch for the quality of their products. My favorite jeans the past two years have been a $10 pair of Steve & Barry denims that I've probably washed 50 times and they're still good to go. (My wife also bought me a S&B cotton shirt, thick and comfortable, emblazoned with "DORK" across the front.)

I also think the Times article gives us a chance to appreciate--and even admire and applaud--the spontaneous order of the market process. I say "gives us a chance" because the article focuses too much on Steve & Barry's own cost-cutting techniques and not enough on the market contexts within which the company works. These entrepreneurs aren't doing this alone. In fact, they don't even know how to make an $8.98 dress--because no one does. They're succeeding first because of the coordinating functions of market prices--especially, in this case, prices of factor inputs--and secondly because of their own entrepreneurial efforts. Steve & Barry's isn't just using low prices as an effective marketing strategy; they are guided by prices to make all their management and production decisions.

In a famous passage of his 1922 treatise Socialism: An Economic and Sociological Analysis, Mises explains that the price system (pp.100-1):

provides a guide amid the bewildering throng of economic possibilities. It enables us to extend judgements of value which apply directly only to consumption goods--or at best to production goods of the lowest order--to all goods of higher orders. Without it, all production by lengthy and roundabout processes would be so many steps in the dark.

Hayek further analyzes the coordinating role of prices. Prices are incentives to make sound decisions with scarce resources, yes. A market price is also an encapsulation of all the bits of local and time specific, often contradictory, knowledge about relative values that is dispersed among the innumerable individuals in the market. No other "mechanism" aggregates dispersed value information as well as the competitive price system. Entrepreneurs discover profit opportunities by comparing prices across time and space, and looking for ways to arbitrage or innovate. As Hayek showed in his famous articles on economics and knowledge, thinking about markets in this way fundamentally shifts the types of questions that are important to ask. "Is this the world's cheapest dress?" Obviously not, and that's not even the interesting question. But the Times writer does get the question right. Quoting the founders of Steve & Barry's:

“There’s been a revolution, a full-blown revolution,” Mr. Shore said, sounding, at times, just a bit like Crazy Eddie. “We just haven’t told anyone yet. If the Gap or Abercrombie & Fitch or J. Crew said that everything in the store is going to be $8.98 or less, it would be front-page news. But while no one was noticing, we opened stores across the country that have identical clothes for much lower prices.”

The question, again, is how.

Good question. Coverage like this helps us see the remarkable new economic reality that is affordable--i.e., marketized--fashion. But it serves us well to understand that its cause is not random, nor is marketized fashion due to a single visionary company. Instead it emerges by the coordination of innumerable dispersed entrepreneurs making the best use of their specialized knowledge under the incentive-guides of competitive market prices. Friend Steve Horwitz at The Austrian Economists states it another way (and provides, in the rest of his post, some theory for context):

We cannot understand spontaneous order without entrepreneurship and monetary calculation, and a focus only on intentional human action misses the ways in which such action produces the unintended but orderly outcomes that are the benefits produced by markets.

In 1850 Frederic Bastiat aptly noted the spontaneous order by which Paris gets fed. In the new world of marketized fashion, Paris gets clothed too. (On this, also see my previous post on the relationship between abstract and specific in fashion.)