That we can never know all that the people know whose actions determine the formation of prices and the methods and direction of production is, of course, of decisive importance not only for theory. It has also the greatest significance for political action. The fact that much more knowledge contributes to form the order of a market economy than can be known to any one mind or used by any one organization is the decisive reason why a market economy is more effective than any other known type of economic order.
-Prof. F.A. Hayek (Ph.D, Economics, author, writer, lecturer)
Prof. Don Boudreaux adds:
The market economy is data-driven – far more data-driven than is any other means of arranging economic affairs. Data – deeply detailed, highly nuanced, ever-changing data – are constantly being discovered, processed, and used by individuals each of whom has strong incentives to gather as much data as are appropriate for his or her purposes and to interpret these data as correctly as possible. To override the decisions of these individuals with state-issued rules and restrictions – or with state-created “plans” – is to override with a puny and amateurish mechanism for gathering and processing relevant data an astonishingly well-calibrated system for gathering and correctly processing inconceivably large amounts of data.
But Socialists scoff at such a notion – of COURSE they know better than all of the rest of us combined! But of course, one does have to ask, how can they know what is my best interest – or yours? And this is the problem with top-down command systems – they never consider that the Individual knows better than the Collective what he wants.
(H/T: Cafe Hayek)
