paper · 1945

The Use of Knowledge in Society

Friedrich Hayek · read the source

• “The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all.”

  Friedrich Hayek, The Use of Knowledge in Society (1945) · Section VI · read it

  Kept because it describes how any large organisation actually works, not just markets. Nobody sees the whole. Coordination comes from overlapping local views and a signal that carries between them, which is why the signal matters more than the plan.

  economicsknowledgesystemsEmergenceSupply and demandCircle of competence

• “The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action.”

  Friedrich Hayek, The Use of Knowledge in Society (1945) · Section VI · read it

  Kept because it inverts the usual praise of markets. The point is not that prices are clever but that they let people be ignorant and still act well. A good interface does the same thing for a programmer.

  economicsknowledgesystemsSupply and demandEquilibriumThe map is not the territory