>Hayek calls attention to incentives to gather accurate information. It is not
>raw compuing power that concerns hiim. It is incentives to get the costs
>right. Market systems create those incentives because individuals profit by
>accurate information about particular things. Planning systems do
>not--everyone is better off if the information is accurate, but since each
>individual bebefits if it si not, we have a classical n-pesron prisoner's
>dilemma or collective goods problem.
This sort of analysis always ignores the immense waste in a "market" system - advertising, management, market research, vast markups thanks to brand fetishism, search costs, financiers' take, etc. Capitalist firms are hardly immune to all the perverse incentives you list too. Why would Michael Jensen have had to theorize managerial waste and suggest leveraged buyouts as their cure if competitive product markets were so elegantly self-regulating?
Doug