… is from page 464 of F.A. Hayek’s profound and important 1964 article “Kinds of Order in Society” (available without charge on-line here) as it appears in Liberty Fund’s 1981 single-volume collection of New Individualist Review:
[I]f the overall character of an order is of the spontaneous kind, we cannot improve upon it by issuing to the elements of that order direct commands: because only these individuals and no central authority will know the circumstances which make them do what they do.
DBx: The knowledge problem first identified by Ludwig von Mises, and elaborated so brilliantly by Hayek, doesn’t arise only when full-on socialism is attempted. This problem condemns to failure even industrial policy and other milder forms of government ‘planning’ of resource allocation. Yet this problem is today completely ignored by proponents of industrial policy. By ignoring this problem they effectively assume it away – and then they, these proponents of industrial policy, think themselves clever and cutting-edge by labeling as “market fundamentalists” or “neoliberals” those of us who point to the reality and inescapability of the knowledge problem, as if attaching derogatory labels to an argument and its proponents suffices to answer that argument convincingly.
