Hayek, Friedrich

Hayek (1945) asserted that the central problem of economic theory is a problem of knowledge. He conceived the economic market as an embodiment of tacit knowledge, in which knowledge that cannot be assimilated by individual minds is yet rendered accessible and usable for human purposes. The market, thus, holds tacit knowledge, and market processes are indeed knowledge transactions.

For Hayek (1945), the fundamental economic problem is determining the "best way of utilizing knowledge initially dispersed among all people" (p. 520). ... Hayek espoused the marvel of the market, arguing that markets "provide inducements which ... make the individuals do the desirable things without anyone having to tell them what to do". Markets "dispense the need of conscious control" (p. 527).

"The most significant fact about this system is the economy of knowledge which it operates, or how little the individual participants need to know [about ohter actors] in order to be able to take the right action" (Hayek 1945, p. 527). 

Bibliography