from page 76 of F.A. Hayek’s last – his 1988 – book, The Fatal Conceit:
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account.
DBx: Hayek died 25 years ago today.
Hayek’s great lesson is that each of us, individually, can know only an infinitesimally small amount of the knowledge the full use of which is required for any great and prosperous civilization to exist – but that, when we engage with each other under the laws of private property, contract, and tort (what Hayek called “the rules of just conduct”), each of us is led by this engagement to combine his or her speck of knowledge with the specks of knowledge of countless others in a way that causes this use of these dispersed bits of knowledge to produce and sustain a great and prosperous civilization.
Hayek’s great counsel is that we never forget how individually ignorant each of us inevitably is, or how unfathomably great is the amount of knowledge daily put to productive use in free, market-oriented societies.