Thanks. Also thanks for your help in that "evolutionary analogies thread" which I failed to mention earlier.
This doesn't seem like a very strong argument. Doesn't tacit information play a bigger role on the shopfloor or sphere of production, than in the allocation of inputs. I mean, if someone can go to the hardware store and purchase some productive inputs (even if they are going to employ them in a production process they can't explain to others) couldn't they tell a planner they need them? Would a planner's capacities be limited by the fact that they know input ---->???------> output if they know what output one gets from an input, but not how to transofrm them. I am not sure how common it would be for the inputs one uses, or the outputs they produce, to be a matter of tacit knowledge. And they certainly couldn't buy or sell them on a market if they couldn't tell others what they were. > > The argument is based on the idea of "tacit information," which is used > to make the claim that the group cannot acquire this information (by > definition) and thus that information cannot be included in the plan. > Inequality of wealth should foul this up, right? > Subjective use-value or the neo-classical notion of "willingness-to-pay" > are often offered as examples of tacit information. The state cannot > make a valid plan for loaves of bread because the state cannot discover > the use-values the group places on bread. Only market prices will > reflect such information. > This seems pretty incompatible with what I have read about technological change usually being a collective, social endeavor. And even if the knowledge about how to generate some innovation from some input was tacit, isn't it still possible that one could be explicit about what inputs were necessary? Isn't this all that is relevant to a planning agency? I have also come across arguments, usually by advocates of Korean style industrial policy and the like, that tacit knowledge about production is a market failure. Since its non-codifiable, it would be impossible to give intellectual property rights in it so it becomes an externality that is impossible to internalize. > The other realm where tacit information is thrown up is technological > creativity and economic change. There is no way for a group to make a > creative discovery, only the individual, who relies on tacit > information, can do this. Or so the argument runs. But certainly this can't be a result of the single planner idea, because plans were formulated by multiple people, and the despots were usually not the planners, right? > Hayek argues > that it is an empirical issue, then points to Eastern Europe. Yeah. I have always thought that the existence of highly centralized capitalist institutions seriously damages Hayek's argument, but not Mises' calculation argument (which I merely think is logically invalid). Mises argument applies to the situation in which a central planner has no external price information to refer to. Defenders of Mises, such as the book reviewer at mises.org say that his argument only shows that worldwide socialism can't work. Thus, misesians wouldn't find much to contradict their arguments in the existence of large corporations, but it seems to be more problematic for Hayekian claims. > > It seems to me the modern corporations have found ways to make plans > even if tacit information cannot be acquired. > I agree. I have read some theoretical literature on the interaction of centralized and decentralized state (or democratic) planning. Are oyu aware of any empirical literature on it? > My view is that it is a mistake to be trapped by the dichotomy: > decentralized==private markets; centralized==state planning. There is > much social interaction that is collective but is not within the state, > and private markets are not the only way to make decentralized decisions. >
