The Use of Knowledge in Society

The Use of Knowledge in Society

"The Use of Knowledge in Society" is a scholarly article written by renowned Austrian-school economist Friedrich Hayek, first published in the September 1945 issue of "The American Economic Review". [http://www.fee.org/publications/the-freeman/article.asp?aid=3487 Book Review: The Use of Knowledge in Society by Friedrich A. Hayek | The Foundation for Economic Education: The Freeman, Ideas on Liberty ] ] Written (along with "The Meaning of Competition") as a rebuttal to fellow economist Oskar R. Lange and his endorsement of a planned economy, it was included among the twelve essays in Hayek's 1948 compendium "Individualism and Economic Order".cite book | title=Individualism and Economic Order| url=http://books.google.com/books?id=5BJcBHuvrsMC&dq=&pg=PP1&ots=3fCDzRNwJF&sig=uaE9-r8ht4tk32SXeVoSUs1CCAA&prev=http://www.google.com/search%3Fq%3DIndividualism%2Band%2BEconomic%2BOrder%26sourceid%3Dnavclient-ff%26ie%3DUTF-8%26rlz%3D1B3GGGL_enUS230US230&sa=X&oi=print&ct=title#PPP1,M1| last=Hayek| first=F. A.| year=1996| publisher=University of Chicago Press| location=Chicago| isbn=0226320936] The article argues against the establishment of a Central Pricing Board (advocated by Lange) by highlighting the assiduously dynamic and organic nature of market price-fluctuations, and the benefits of this phenomenon. He asserts that a centrally planned market could never match the efficiency of the open market because of the relatively egalitarian distribution of information (i.e., each individual knows only a small fraction of all which is known collectively). A decentralized economy complements the decentralized nature of information.Cite web|url=http://research.kauffman.org/cwp/appmanager/research/researchDesktop;jsessionid=GVJKUmhZQ8YdcdEwB2DGgQxpdz26X7E3ZO8TfnqSZE7nuSIAUScJ!973872261?_nfpb=true&_pageLabel=research_resourceDetail&keep=all&id=Research/Resource/Journal_Article_2848.htm&_nfls=false|title=The use of knowledge in society (abstract)|accessdate=2007-10-05|publisher=Ewing Marion Kauffman Foundation] Also discussed within are the concepts of 'individual equilibrium' and of Hayek's notion of the divide between information which is useful and practicable versus that which is purely scientific or theoretical (which he views contemptuously).cite book | title=Carl Menger and this legacy in economics| url=http://books.google.com/books?id=ir0g_PW5lAYC&pg=PA393&lpg=PA393&dq=%22the+use+of+knowledge+in+society%22+reaction&source=web&ots=i3d9J1yqrk&sig=a9YMGsmDXBLWlEsPeuN_61s2VrQ#PPA395,M1| last=Bruce J. Caldwell (editor)| year=1990| pages=392-95| publisher=Duke University Press| isbn=0822310872]

"The Use of Knowledge in Society" met with a poor reception from fellow economists because of the contemporary political climate and its perception as being overly trivial in its critiques. Partly as a result of this disappointing outcome, Hayek had by the end of the 1940s ceased to target his literature at the established economic community. Twenty years later these ideas had become more tolerable; today several are accepted as basic economic tenets. Specifically, the essay's central argument that market price fluctuations promote efficient distribution of resources is embraced by most modern economists.cite book | title=Hayek's Road to Freedom| url=http://www.angelfire.com/mi/libertyinstitute/hayek1.html#3| last=Mitra| first=Barun S.| authorlink=bmitra@bigfoot.com| year=1999| publisher=Liberty Institute]

The essay convinced Jimbo Wales of the workability of the free encyclopedia project that later became Wikipedia.Mangu-Ward, Katherine. "Wikipedia and Beyond." "Reason". June 2007. [http://www.reason.com/news/show/119689.html] ]

References

External links

*"The Use of Knowledge in Society" [http://www.virtualschool.edu/mon/Economics/HayekUseOfKnowledge.html (full text)]
*"The Use of Knowledge in Society" [http://www.indiapolicy.sabhlokcity.com/debate/notes.html (link to PDF at the India Policy Institute)]
*fr [http://www.catallaxia.org/wiki/Friedrich_A._Hayek:L'utilisation_de_la_connaissance_dans_la_soci%C3%A9t%C3%A9 French version of the article]


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