Review of "The Use of Knowledge in Society" by Friedrich von Hayek
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- เผยแพร่เมื่อ 21 ก.ย. 2024
- This video is a review of "The Use of Knowledge in Society" by Friedrich August von Hayek. "The Use of Knowledge in Society" is an article and economic paper first published in the September 1945 issue of The American Economic Review. The article was written as a rebuttal to economist Oskar Lange who endorsed a planned economy.
"The Use of Knowledge in Society" opposes central planning in the economy and advocates for the decentralization of decision making. Information regarding the economy, such as the desires and demands of consumers and the resources of the economy, can not be given to any one individual or entity, but is dispersed throughout the population. Even if central planners had this information, which would be impossible, they would not be able to maintain it because consumer demands and desires and economic resources change constantly. That is why economic calculus and decision making must be decentralized through the free market so that individuals and businesses can make economic decisions with the localized knowledge they have. Only individual consumers really know what they demand and desire, and only individual businesses really know what resources they have available, so their right to make their own economic decisions is a necessity for proper economic calculus in the economy, and is much more efficient and effective than having a central entity making economic decisions.
"The Use of Knowledge in Society" is a jewel in the works of the Austrian School of Economics. Austrian economists and Austrian economics advocate for free enterprise and the right of individuals and businesses to make their own economic decisions without the interference of the government. Unlike most scholarly papers, this article is widely read by the public and has influenced many people. For example, Jimmy Wales, the co-founder of Wikipedia cited this article as a major influence in "how to manage the Wikipedia project". Since information is decentralized and dispersed throughout the population, it is better to empower people all over the world to contribute to Wikipedia and write articles rather than have a central team with limited knowledge write every article on Wikipedia.
In this video, I will review this article with you and share some important quotes. In addition, I will discuss the relevance of this article on both the macro and micro level, going over its implications on the world and also for yourself in how you manage organizations. Successful military organizations, for example, have implemented mission-type tactics to allow for the decentralization of decision making to take advantage of the decentralization of knowledge on the battlefield. Officers are empowered to make their own decisions and to take initiative based on the localized information they have to achieve the overarching goal, rather than to be inefficiently micromanaged by superior officers. Mission-type tactics was first developed in the Prussian army and we will discuss this as an example of the advantage of decentralizing decision making.
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Thank you for the video! Reread the paper last weekend, one of the best pieces of economics ever written! Getting something new out of it in every read 🤓
Thank you so much for the review, Justin!
Very interesting topic, timeless and still useful to understand the world today. I appreciate glimpses from different parts of the world and life there.
Thank you, always glad to hear
Hello, how are you, thanks again for sharing your concepts on economics and everything related to it. One question, I don't know if it fits in the context of this video, but since you are in Sweden, I would like to know your opinion about the economic model used by the Nordic countries. They are supposed to implement a type of "socialism" (understanding that this has been a debate for years), but, leaving the controversy aside, do you think that this economic model is the one that is closest to the efficiency of a country?
Salute my friend and thanks in advanced.
Thank you my friend I am doing well. The way I see it, every country ever since leaving the gold standard is a "socialist country" as central planning of the currency and capital markets is inherently socialist and anti free market.
As for the Nordic countries, they are actually much more free market than people often think. Sweden, for example, does not have a death tax, does not tax citizens living and earning money abroad, has no movement for a wealth tax, and does not even have a minimum wage.
The United States on the other hand has all of the above. The USA is the actual socialist/Marxist country.
The societies in the Nordic countries are also very different from the United States. The Nordic countries have for a long time been very homogenous, although this is currently changing, and spending time there I feel like the nation is like one big family.
This is totally different from countries like the United States that don't have common blood or even common culture that binds people together. Different groups in the US often have bad relations with each other.
The Nordic countries are actual nation states. A country like the United States on the other hand is not really a "nation", but simply a big, and in my opinion soulless, economic zone. That's one of the reasons welfare systems work far better in the Nordic countries and not so much in the US. The societies are simply very different and so there should be different ideal policies.
Thanks for your reply and, yes sir, I totally agree with you regarding the differences of societies and even cultural between nordics and the US, that’s definitely a huge part of the gap between them.
I did not know they don’t have minimum wage, so, how minimum wages or wages itself are?
As a real example from my end, I pay for an assistant on a retail business I own, and I also pay for a lady who helps me for the housekeeping. Both of them salaries are established to a minimum wage by the government. Taking these two examples in a Nordic country, how would their salaries be over there?
Thanks again.
@@snaketrader Salaries in the Nordic countries are quite high. The market determines the wage, and that is what works best. No need for the government to mandate a minimum wage.
Menger, Mises, Hayek, Rothbard? One of these things is not like the other
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