... A Mieses-Hayekian opposition to our position, however, would be
something like this: "all needs & desires of all individuals are unknown &
unknowable to any single mind; we as individuals only possess very partial
knowledge; it can't be properly said that we 'know' even our own needs &
desires unless real, not hypothetical, alternatives are presented &
opportunity costs (tacitly) calculated through our participation in the
market; we can't explicitly go through all the relations between ends and
means, so we need prices that help us (tacitly) make use of a relative
value of each alternative." (This radical privileging of tacit & partial
knowledge dispersed among individuals over explicit & collective
knowledge, as well as opposition to conscious planning, is a theme that
later gets carried by postmodernists to its anti-scientific extreme.)
Whereas we think of the market, for instance, as a mechanism of rationing
("A shortage of water supply? Raise the price! Unemployment? Lower the
wage!") in the system of production for profits, not for human needs,
Hayek thinks of the market as a mechanism of discovery of human needs &
desires we cannot know otherwise. For us the market is a question of
social relations; for Hayek, it is a matter of epistemology.
***** If we possess all the relevant information, if we can start out
from a given system of preferences, and if we command complete knowledge
of available means, the problem which remains is purely one of logic. That
is, the answer to the question of what is the best use of the available
means is implicit in our assumptions. The conditions which the solution of
this optimum problem must satisfy have been fully worked out and can be
stated best in mathematical form: put at their briefest, they are that the
marginal rates of substitution between any two commodities or factors must
be the same in all their different uses.
This, however, is emphatically not the economic problem which society
faces. And the economic calculus which we have developed to solve this
logical problem, though an important step toward the solution of the
economic problem of society, does not yet provide an answer to it. The
reason for this is that the "data" from which the economic calculus starts
are never for the whole society "given" to a single mind which could work
out the implications and can never be so given. (Hayek, "The Use of
Knowledge in Society," at
<http://www.virtualschool.edu/mon/Economics/HayekUseOfKnowledge.html> *****
I agree with Hayek that no single mind can command the complete knowledge
of all our needs & desires + all available means. Why should we, however,
strive to work out planned economy with such assumptions of divine
perfection? Why set the bar of successful planning so impossibly
high? There seems no reason to assume what Hayek has us assume. We need
only know enough to meet existing needs better than capitalism does (= we
don't have to be perfect) & leave room for improvement (say, invention of
greener technology) through the process of trial and error (here we can
even, if we so desire, leave a little room for the "market" as long as the
"market" doesn't assume the character of compulsion). In other words, I
object to Hayek's assumption about what degree of knowledge is necessary
to get socialist planning going.