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https://libertarianinstitute.org/articles/tgif-free-market-knowledge/

by Sheldon Richman

As a follow-up to my recent article about F. A. Hayek’s classic article “The Use of Knowledge in Society” (1945), I thought it worth extending Hayek’s exploration of this area of social theory. In 1968 the Nobel laureate-economist delivered a lecture in German known in English as “Competition as a Discovery Procedure.” It’s an alluring title, and anyone concerned with what makes for a good and prosperous society should be familiar with Hayek’s basic point.

Hayek gets right to it. He notes that standard macroeconomists are guilty of having “investigated competition primarily under assumptions which, if they were actually true, would make competition completely useless and uninteresting.” By that, he meant, “If anyone actually knew everything that economic theory designated as ‘data,’ competition would indeed be a highly wasteful method of securing adjustment to these facts.”

In other words, if all the “data” were actually accessible data, solving society’s scarcity problem would be a piece of cake, at least if the government’s computer was powerful enough. (I’m led to understand that, fortunately, many economists have advanced since he gave this lecture, probably in part because of his challenge.)

“Hence,” Hayek went on,

it is also not surprising that some authors have concluded that we can either completely renounce the market, or that its outcomes are to be considered at most a first step toward creating a social product that we can then manipulate, correct, or redistribute in any way we please.

Unfortunately, lots of such people are still around today.

See the rest here

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