Yesterday’s “Quote of the Day” was by Don Boudreau, one of my favorite parts of Cafe Hayek. Quote One of my favorite essays by Hayek,Use of knowledge in societyPublished in American Economic Review (1945. (Note: Wouldn’t it be great if the AER started publishing articles that made key points using just words, without any mathematical formulas? One can dream.)
Below are the key paragraphs quoted by Don.
The peculiar nature of the problems of rational economic order is determined precisely by the fact that knowledge of the situations we have to utilize never exists in a centralized or unified form, but only as dispersed fragments of the incomplete and often contradictory knowledge possessed by all individual individuals. The economic problem of society is therefore not simply a problem of how to allocate resources that are “given” – if “given” is taken to mean given to a single mind that deliberately solves the problem set by these “data” – but rather a problem of how to ensure the best use of resources known to every member of society for purposes whose relative importance is known only to these individuals. Or, in simple terms, it is a problem of utilizing knowledge that is not given to anyone as a whole.
For the last 20 or so years that I have taught at the Naval Postgraduate School, I have assigned this article and had the class read through it paragraph by paragraph (in the “old days,” Liberty Fund would number each paragraph to facilitate class discussion).
But when you teach an article over and over, it’s impossible not to notice a problem. In fact, I only noticed one problem with this article: the paragraph above.
It is “frequently contradictory knowledge.”
knowledge Can not There can be no contradictions. Opinions can be contradictory. Evaluations can be contradictory. But knowledge cannot be contradictory.
Here’s an example. I live in Minaki, Ontario, at a vacation home. One of the big changes here since last year is that the garbage dump was closed. Before, bears used to come there and eat people’s leftover food. Now they don’t. So now the bears are coming closer to the vacation home.
For example, suppose I find out that there is a bear in my garden, and you know that there is no bear, if I really do know then you are wrong.
Or vice versa. You know there are no bears in my yard. I “know” there are no bears. If you really know, then I’m wrong.
yes.
