Quotation of the Day…

by Don Boudreaux on August 9, 2012

in Complexity & Emergence, Hayek, Prices

… is from pages 86-87 of Hayek’s 1948 collection, Individualism and Economic Order; specifically, it’s from section 6 of Hayek’s 1945 article “The Use of Knowledge in Society“:

We must look at the price system as such a mechanism for communicating information if we want to understand its real function….  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.  In abbreviated form, by a kind of symbol, only the most essential information is passed on and passed on only to those concerned.  It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement.

I offer the above quotation, not surprisingly, as evidence against David Brin’s misunderstanding of Hayek’s work.

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