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LIT-1337: The Use of Knowledge in Society

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Properties5
StatusActive — read 2026-10-21 (NOTE-1036) in full, from the Econlib reprint of the American Economic Review article, published there with the AEA's permission; worth reading for the distinction between scientific knowledge and knowledge "of the particular circumstances of time and place", for the argument that the second cannot be put into statistics for a central authority (THEORY-841), and for the price system as a mechanism that conveys relative scarcities without their causes. Read it knowing that it is an argument from examples with no model or evidence, that it is about the economic order and not organizations, and that it argues for competition, not that removing any given public rule decentralizes decisions.
Version2
Tagssocial-science, society-and-governance
Cited as “paper” byNOTE-1036 — Hayek — The use of knowledge in society
Cited as “source” byTHEORY-841 — Knowledge of the particular circumstances of time and place is held dispersed among many people and cannot be conveyed to a central authority in statistical form, so decisions that depend on it are better taken by those who hold it, and a price system lets them fit their decisions together by conveying the relative scarcities each needs without the causes behind them

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Hayek, F. A. (1945). The Use of Knowledge in Society. American Economic Review 35(4): 519–530.

Read in full on 2026-10-21 (NOTE-1036), from the Econlib reprint; JSTOR holds the original at stable/1809376. The account drawn from it is THEORY-841, Proposed.

Why this is here

A18 brought it in as the informational case for some decentralized arrangements: “decentralized decision-making can use local information unavailable to a central planner”, which A18 said is “an argument for the informational advantages of certain governance arrangements, rather than evidence that every restriction on private action impairs information use.” Bears on CLAIM-410. NOTE-649 names it among the antecedents of LIT-848.

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