![]() ![]() But, as I now see these problems, this is no accident. Many of the points I wish to make are indeed conclusions toward which diverse paths of reasoning have unexpectedly converged. Though the problem with which I want primarily to deal in this paper is the problem of a rational economic organization, I shall in its course be led again and again to point to its close connections with certain methodological questions. This character of the fundamental problem has, I am afraid, been obscured rather than illuminated by many of the recent refinements of economic theory, particularly by many of the uses made of mathematics. ![]() Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality. The economic problem of society is thus not merely a problem of how to allocate “given” resources-if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The reason for this is that the “data” from which the economic calculus starts are never for the whole society “given” to a single mind which could work out the implications and can never be so given. And the economic calculus which we have developed to solve this logical problem, though an important step toward the solution of the economic problem of society, does not yet provide an answer to it. ![]() This, however, is emphatically not the economic problem which society faces. The conditions which the solution of this optimum problem must satisfy have been fully worked out and can be stated best in mathematical form: put at their briefest, they are that the marginal rates of substitution between any two commodities or factors must be the same in all their different uses. That is, the answer to the question of what is the best use of the available means is implicit in our assumptions. If we possess all the relevant information, if we can start out from a given system of preferences, and if we command complete knowledge of available means, the problem which remains is purely one of logic. What is the problem we wish to solve when we try to construct a rational economic order? On certain familiar assumptions the answer is simple enough. Publisher/Edition – American Economic Review. ![]() The Use of Knowledge in Society AER, 1945Īuthor-label – Hayek, Friedrich A. ![]()
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