Cafe Hayek - Latest Comments in The use of knowledge

Re: The use of knowledge

Sam Grove — Mon, 14 May 2007 21:02:15 -0000

Could we describe markets as ordered chaos?..or perhaps chaotic order.

The failure of a command-and-control economy is that markets operate on the fact that individuals have different desires.

Markets operate in any economy. It's the results that vary. In a command economy, a black market will appear. It can be determined how free a market is by how much of it is underground.

Re: The use of knowledge

Carl Marks — Mon, 14 May 2007 14:03:25 -0000

Mr. Econotarian

I'll grant that there are significant issues on the incentive front which make running a socialist state very difficult, but most supporters of the market order will grant the assumption of benevolence to the dictator in order to prove that even when given favorable conditions socialism will still fail.

Marxists also enjoyed talking about the transformation of humans into the new Socialist Man which would be immune from all temptation of personal gain. They would be perfect utilitarians. Economists cannot say whether this state will arise, but they can comment on whether this will change the underlying problem of economic calculation.

A Marxist would also be likely to claim that capitalists are just as greedy as the planners would be, so the two systems are equal in this respect.

Re: The use of knowledge

Mr. Econotarian — Mon, 14 May 2007 12:09:11 -0000

I disagree with the above posters!

The failure of a command-and-control economy is that markets operate on the fact that individuals have different desires.

Bob may want a green car and Jill may want a red car. To solve this problem, Comrade Commisar decides they'll all be grey.

Re: The use of knowledge

Slocum — Mon, 14 May 2007 10:06:44 -0000

"command and control economies inevitable must fail to deliver the goods because the appropriate information is not, and cannot be, given to any one mind."

And even if the information could be "given to any one mind", no one mind could make use of it. It's not just that the information is widely distributed, but also that the cognitive power to process it is also widely distributed. As is the power to convert the information and cognition into action.

Re: The use of knowledge

Bob Smith — Mon, 14 May 2007 08:17:41 -0000

If only I could convince urban planners of the truth of these points.

Re: The use of knowledge

Carl Marks — Mon, 14 May 2007 07:19:26 -0000

A slight issue I have with Smith's statement is that the greatest problem for a command economy is not the issue of bringing all data together but rather having the data in a uniform measurement, prices, which only entrepreneurs can accurately appraise in a true market process of exchange in property rights. Brining the data together would indeed prove difficult, but correct calculation is impossible even if the data were brought together.