Hayek's "The Use of Knowledge in Society"

This lesson's academic article sheds light on the role and use of knowledge in decision making and is directly related to the discussion on the previous page. It was written by the Austrian economist Friedrich A. Hayek (1899–1992). Hayek received the Nobel Memorial Prize in Economics in 1974 with Swedish economist Gunnar Myrdal and is known for his defense of free-market capitalism against socialist and collectivist thought. He is considered by many to be one of the most important economists and political philosophers of the twentieth century. He spent most of his academic career at the London School of Economics and at the University of Chicago.

As mentioned above, the assigned article was selected because of the important insights it offers into the use of knowledge in decision making. Specifically, the article emphasizes that decisions aimed at effectively allocating limited resources (a task that government is charged with) require knowledge that no individual or group of experts has or is capable of acquiring. As such, the article sheds light on the complexities of authorizing representatives to make centralized decisions on behalf their constituents.

As you read the article, pay particular attention to the two different types of knowledge that Hayek discusses: "scientific" and "private" knowledge (the latter is described in the article as knowledge that individuals possess separately). In addition, reflect on why it is important for a representative body to be able to capture private knowledge for purposes of making decisions about the use and acquisition of public resources. Finally, consider why it might be difficult for a representative body to capture such knowledge.

If you would like to learn more about F.A. Hayek and his writings, I recommend that you listen to the following podcast (please note that you are not required to listed to this podcast) published by the Library of Economics and Liberty:

• Boudreaux on Reading Hayek (Note: The conversation was recorded on December 7, 2012. The length of the entire recording is 1:13:02.)

The podcast includes an interview with Don Boudreaux of George Mason University, who is interviewed by Russ Roberts, a research fellow at the Hoover Institution at Stanford University. The podcast provides an overview of Hayek's most important writings and suggestions on how to approach Hayek's works if you are a beginner. If you do not have enough time to listen to the entire podcast, you may want to listen to the initial 30 minutes, which provides a more general overview of Hayek's writings.

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References

Hayek, F. A. (1945, September). The use of knowledge in society. The American Economic Review, 35(4), 519-530.