[lbo-talk] Markets and info

tfast tfast at yorku.ca
Thu May 11 15:27:27 PDT 2006


Hayek is indeed the place to start. He makes the argument that prices are an information signalling system. A very accessible paper is here:

a.. Hayek, F. A. 1945. "The Use of Knowledge in Society". [HTML format] American Economic Review. Vol. 35, No. 4. (Sept): 519-530. [PDF format version]

Keep in mind Hayek was deeply involved in the socialist calculation debate which orthodoxy lost. Hayek's paper listed above is his final rejoinder after the defeat. What is great about this paper is it sets out the core of contemporary propositions about the superiority of markets but is clever enough not to formally model the argument. Had he done so he would have ran into all the intractability which have priced contemporary models out of reality. I fear unless human beings really are Bayesian calculators the socialists still own this debate.

Travis ____________________________________

http://canadianobserver.wordpress.com/



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