I am sorry about the delay in replying to this
the list server stopped sending stuff to me in the
middle of the month.
Duncan Wrote
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In reply to Paul and Allin's comments on Hayek.
I'm not satisfied that your reply, emphasizing better use of technical
tools like input-output tables and computers in planning, really comes to
grips with Hayek's point as I understand it.
His argument is not that the market is a kind of super-computer (though I
suppose he views it as that, too), but that the market forces individuals
to reveal private information about economically relevant issues like their
technologies and valuation of commodities by forcing them to take a
position in the market with something of value at stake. In this way of
thinking, the market both identifies and exploits "arbitrages" between
suppliers and demanders. In a dynamic context this is important because it
is the engine that drives the system through processes of technical
innovation.
Paul Replies
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What is this private information. If you look at the examples
that he cites - the specialised information available to shipping agents
etc, these are just the areas that, through the automation of
the airline booking systems have proven themselves most amenable to
computerisation and centralisation.
If we look at the more general case of technological advance, then
it is not a matter of revealing information that is important, but
its production in the first place. The information about how to
improve technology is itself a product of labour, and the first question
is how to so allocate this R and D labour as to insure that the
information is produced in the first place. Second, there has to
be a means of communicating this to potential users. Third there
has to be a willingness and ability of potential users to take it up.
It is not evident that the existence of markets is either necessary
to or helpful to these processes. For instance, markets result in
information being made into private property, leading to commercial
secrecy and restrictions on use of information. That development can
occur rapidly without markets is evidenced by the internet, all of whose
key inventions were developed outside of the market. The basic research
was publicly funded, the software that made the web possible was
initially distributed free. The main commercial computer companies
like Microsoft and IBM contributed nothing to either the basic technology
or the initial spread of the internet.