Hayek's argument was that the market was the most "efficient" way for
information about each person's valuations to be distributed to those
with the greatest desire to know (among them, those most likely to want
to supply something to satisfy those valuations) -- efficient in the
sense that, as a post-Coasian might say, the costs of acquiring the
information are lowest and the incentives for producing and making
available the information the greatest.
From that economic-theory base he went on to argue that "market
efficiency" was a desirable thing for a society, and hence that
government action (which tended to impeded that distribution of
information) was a bad thing, taking one thing with another (this
argument is apart from his well-known contention that history amply
displays the noticeable tendency for those possessing political power to
seek mightily to acquire yet more). Hence, "market efficiency" is
important "in the politically important sense" (I quote Henwood here).
Not a "useful confusion of terms," as Henwood put it, but an
understanding of a connection.
Michael Etchison
[opinions mine, not the PUCT's]
