The Use of Knowledge in Society

Hayeks Article shows how the price system works as proxy for local available information, thus reducing complexity in enterpreneurial decision problems. Interesting footnote: Jim Wales names this paper as fundamental for his organisation of Wikipedia.

As Alfred Whitehead has said in another connection, "It is a profoundly erroneous truism, repeated by all copy-books and by eminent people when they are making speeches, that we should cultivate the habit of thinking what we are doing. The precise opposite is the case. Civilization advances by extending the number of important operations which we can perform without thinking about them.." This is of profound significance in the social field. We make constant use of formulas, symbols, and rules whose meaning we do not understand and through the use of which we avail ourselves of the assistance of knowledge which individually we do not possess. We have developed these practices and institutions by building upon habits and institutions which have proved successful in their own sphere and which have in turn become the foundation of the civilization we have built up.

http://web.missouri.edu/~podgurskym/Econ_4970/readings/The%20Use%20of%20Knowledge%20in%20Society.pdf