Hayek - Economics and Knowledge Flashcards
Economics and Knowledge is about
how knowledge is communicated and acquired
Expectations
○ Economics is about expectations; can’t understand where markets are heading without understanding what individuals are expecting to happen in the markets
Equilibrium
○ Dynamic concept where it involves
§ The passage of time
§ The mutual Consistency of Plans
§ The fulfillment of expectations of individuals and to what extent we have it
Division of Knowledge
○ Market economy requires coordination amongst individuals.
○ Divide economic system on labor and knowledge.
Decentralizing knowledge is a fundamental virtue of a market economy.
- Data is subjective
○ As it is held within individual minds
○ Problem is not mobilizing physical resources but also getting minds (knowledge in individuals) to coordinate
Define expectations to define
what market equilibrium is to look like. Hayek did not think expectations were rational in the sense of corresponding to a model of the outside world. Hayek reluctant to tie expectations to anything objective; he kept it subjective.
Knowledge
○ Economics is a science of knowledge
○ Concepts of expectations might fit
○ The problem which we pretend to solve is how spontaneous actions of a few number of people, only posessing bits of knowledge, brings about a state of affairs in which prices correspond to costs, which could be brought about by deliberate direction only by somebody who possessed the combined knowledge of all individuals.
Concept of equilibrium
can be made definite and clear only in terms of assumptions concerning foresight. Equilibrium is comprised of a system of tautologies that can only be confined to one person, versus the larger public/group as a whole.
Data vs Datum
○ Datum: something given, but questionable as to whom the facts (data) is to be given.
§ “constancy of data”
Why data in the subjective sense should ever correspond with objective data
