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Hayek (and Fukuyama) on the Use of Knowledge in Society

Reviewing Matthew Crawford's Shop Craft as Soul Craft, Francis Fukuyama writes, in this past Sunday's New York Times Book Review:

educated people with high-status jobs – investment bankers, professors,
lawyers – often believe that they could do anything their less-educated
brethren can, if only they put their minds to it, because cognitive
ability is the only ability that counts.  The truth is that some would
not have the physical and cognitive ability to do skilled blue-collar
work, and that others could do it only if they invested 20 years of
their life in learning a trade. “Shop Class as Soulcraft” makes this
quite vivid by explaining in detail what is actually involved in
rebuilding a Volkswagen engine: grinding down the gasket joining the intake ports to the cylinder
heads, with a file, tracing the custom-fit gasket with an X-Acto knife,
removing metal on the manifolds with a pneumatic die grinder so the
passageways will mate perfectly. Small signs of galling and
discoloration mean excessive heat buildup, caused by a previous owner’s
failure to lubricate; the slight bulging of a valve stem points to a
root cause of wear that a novice mechanic would completely fail to

Indeed so.  This insight that a successful economy must
continually use knowledge that is dispersed, unimaginably detailed, and often
unable to be articulated fueled F.A. Hayek's skepticism of government
intervention.  Here's Hayek, from his 1945 article "The Use of Knowledge in Society":

Today it is almost heresy to
suggest that scientific knowledge is not the sum of all knowledge.  But
a little reflection will show that there is beyond question a body of
very important but unorganized knowledge which cannot possibly be
called scientific in the sense of knowledge of general rules: the
knowledge of the particular circumstances of time and place.  It is
with respect to this that practically every individual has some
advantage over all others because he possesses unique information of
which beneficial use might be made, but of which use can be made only
if the decisions depending on it are left to him or are made with his
active cooperation.  We need to remember only how much we have to learn
in any occupation after we have completed our theoretical training, how
big a part of our working life we spend learning particular jobs, and
how valuable an asset in all walks of life is knowledge of people, of
local conditions, and of special circumstances.  To know of and put to use a machine not fully employed, or somebody's
skill which could be better utilized, or to be aware of a surplus stock
which can be drawn upon during an interruption of supplies, is socially
quite as useful as the knowledge of better alternative techniques. And
the shipper who earns his living from using otherwise empty or
half-filled journeys of tramp-steamers, or the estate agent whose whole
knowledge is almost exclusively one of temporary opportunities, or the arbitrageur
who gains from local differences of commodity prices, are all
performing eminently useful functions based on special knowledge of
circumstances of the fleeting moment not known to others.

No fact about an advanced economy is more vital to understand than this one – and very, very few are as vital.


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