We have attempted to produce a critique of Hayeks work on
the information theoretic aspects of the market. It
was submited to the EEA at Boston this spring, it
is also online as:
http://www.cs.strath.ac.uk/Contrib/wpc/reports/hayek/hayek.html
We argue that his work is not grounded in any recognisable variant of
information theory and that if one does attempt to quantify
the flows of information consequence is that, contrary to Hayek's claims, the
amount of information that would have to be
transmitted in a planned system is substantially lower than for a
market system. The centralised gathering of information is
less onerous than the commercial correspondence required
by the market. In addition, the convergence
time of the market system is slower. The implication of faster
convergence for adaptation to changing rather than stable conditions
of production and consumption are obvious.
In addition, it should be noted that in our model for the market,
we ignored any information that has to be sent around
the system in order to make payments. In practice, with the
sending of invoices, cheques, receipts, clearing of cheques etc.,
the information flow in the market system is likely to be twice
as high as our estimates.
The higher communications overheads of market economies are
reflected in the numbers of office workers they employ,
which in turn leaves its mark on the architecture of cities---
witness the skylines of Moscow and New York.
I would also concur with Jerry's remarks regarding the use
of standard accounting packages on PCs and the use of bar codes.
Paul Cockshott
wpc@cs.strath.ac.uk
http://www.cs.strath.ac.uk/CS/Biog/wpc/index.html