Markets were valued by Hayek for computing tacit dispersed knowledge, not just coordinating plans.

Evidence

In his seminal article on “Economics and Knowledge” from 1937, Hayek argued that the assumption of perfect knowledge in economic science was eliding the most important question that the social sciences had to address: “how knowledge is acquired and communicated.” Epistemic limitations deriving from the division of knowledge had both scientific and political consequences for just how much one (e.g. the state; the planning board; the welfare economist) was capable of knowing and thus of predicting adequately. Neoliberals shared the same critique of planning based on the impossibility of centralizing information efficiently, and the necessity of letting horizontal adjustments substitute for vertical decisions. But there existed an additional epistemological limit to planning. It was not only that social knowledge could not be centralized in one place, but also that it remained largely implicit, that is, tacitly embedded in traditions and customs. … In order to articulate a model for a liberal society, neoliberals agreed, one had to start from the complexity of existing orders wherein “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.” The superiority of competitive markets did not lie only with the putatively effortless coordination of the various individual plans, but stemmed from their capacity to draw out, compute, and value the tacit knowledge carried by the participants. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 72

Categorization

• DEFINE: Clarifies the epistemic case for markets as knowledge-drawing devices operating on tacit, dispersed judgment.
• XREF: connects to: Hayek reframed capitalism’s core problem as knowledge fragmentation, not labor or value. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 168; Hayek justified markets by dispersed knowledge, not happiness maximization — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin: The Making…, 2195; Hayek’s market argument rests on an epistemology of dispersed tacit knowledge — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 72 (+7 more)

Broader Connections

• Hayek’s market argument rests on an epistemology of dispersed tacit knowledge #corroborates (1.00) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 72
• Hayek justified markets by dispersed knowledge, not happiness maximization #corroborates (0.90) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 2195
• Hayek’s epistemology made price-generated knowledge local and impossible to centralize #corroborates (0.90) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 68
• Hayek’s knowledge schema treats information as a disembodied good #contradicts (0.90) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 2102
• Hayek held that dispersed market knowledge trumps even the wisest individual’s knowledge #expands (0.85) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 225
• Hayek saw the market as an unrepresentable knowledge network, not a contained machine #corroborates (0.85) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 171
• Hayek located rationality in impersonal market processes, not individuals #expands (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 223
• Neoliberals recast Hayek’s tacit knowledge into a commodified thing for scientific resonance #complicates (0.80) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 2162
• Hayek’s extended order subordinates political authority to market discipline #expands (0.75) — Shoshana Zuboff, The Age of Surveillance Capitalism, 120