at http://www.nytimes.com/2011/05/08/books/review/f-a-hayek-big-government-skeptic.html, Francis Fukuyama writes: >Hayek’s skepticism about the effects of “big government” are rooted in an >epistemological observation summarized in a 1945 article called “The Uses of >Knowledge in Society.” There he argued that most of the knowledge in a modern >economy was local in nature, and hence unavailable to central planners. The >brilliance of a market economy was that it allocated resources through the >decentralized decisions of a myriad of buyers and sellers who interacted on >the basis of their own particular knowledge. The market was a form of >“spontaneous order,” which was far superior to planned societies based on the >hubris of Cartesian rationalism. He and his fellow Austrian Ludwig von Mises >used this argument against Joseph Schumpeter in a famous debate in the 1930s >and ’40s over whether socialism or capitalism offered a more efficient >economic system. In hindsight, Hayek clearly emerged the winner. <
does anyone know anything about this "famous debate"? BTW, Hayek's theory is clearly wrong if it says that "most of the knowledge in a modern economy was local in nature." Individuals -- including individual firms -- clearly know much more about the benefits and costs that affect them as individuals alone than do "central planners." But they have limited knowledge of externalities (how their actions impose costs on other people, etc.) and hardly any knowledge at all about macro-level effects of their actions (as with global warming or macroeconomic demand failure). Even if they do know these things, the individualized incentives (profit-grubbing) of a capitalist economy encourage them to externalize as many of their individual costs as possible (dumping them on others) and internalize as many external benefits as possible. BTW2, can someone explain how there can be a "spontaneous order" in a market without the state using coercion to enforce (some) property rights? -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
