[HN Gopher] The Use of Knowledge in Society (1945) [pdf]
___________________________________________________________________
The Use of Knowledge in Society (1945) [pdf]
Author : kreyenborgi
Score : 101 points
Date : 2024-10-28 14:26 UTC (1 days ago)
(HTM) web link (www.kysq.org)
(TXT) w3m dump (www.kysq.org)
| kaycebasques wrote:
| I've been exploring data / information / knowledge / wisdom
| management a lot over the last couple months. I was surprised to
| discover how little consensus there is over the meaning of each
| of those terms. Or rather, subfields seem to have different takes
| on the meanings. "Data" and "information" I can kinda pin down.
| "Knowledge" and "wisdom" much less. Hayek in this article for
| instance does not seem to ever define what he means by
| "knowledge". Reading between the lines, he seems to think of it
| as being able to use data and information to make effective /
| economical decisions.
|
| It's especially unfortunate that writers assume everyone is on
| the same page about what "knowledge" means because the meaning of
| the term seems to have changed a lot over the last few hundred
| years.
| A4ET8a8uTh0 wrote:
| I think I agree. Oddly, the one place where the terms gained
| some level of settling appears to be corporate, but I can't
| tell if it is due to the nature of corporations, cross-
| pollination or some other unknown factors.
|
| What I personally find very interesting is the age of that
| paper and the fact that, the discrepancy between model most
| commonly presented in school ( in my case, variant of perfectly
| rational individual ) and real life has been voiced nearly
| eight decades ago and is not seriously discussed as
| foundational knowledge when it comes to economics.
| churchill wrote:
| Once you start on the path of semantics, it's often turtles all
| the way down. So, unless you want to be rigorous, it's best to
| go with the generally accepted best bet.
| kaycebasques wrote:
| For sure, I know comments about semantics often don't go down
| well on HN. Was just sharing something I'm intellectually
| curious about. The act of trying to pin down a rigorous
| definition has exposed me to 5-10 different interpretations
| and each has given me different perspective on how to manage
| this nebulous thing we call knowledge.
| throwaway19972 wrote:
| "Generally accepted" is nearly impossible to discern from an
| individual standpoint. I prefer Wittgenstein's stance that
| you should essentially accept uncertainty that you refer to
| the same world/concepts/knowledge that others do and engage
| in good faith efforts to communicate the best you can. This
| amounts to the same thing but it's not weighted towards some
| (likely wildly incorrect) subjective viewpoint of the general
| population.
| vundercind wrote:
| I've refrained from commenting on this one precisely because (I
| assume) his definition of "rational economic order" and his
| justification for "best", in the first two paragraphs, are
| context a reader of this journal is expected to already have,
| since he doesn't elaborate on them, and lacking that the rest
| of the paper's basically pointless (though his protest that in
| 1945 it was widely denied that there is any knowledge but
| scientific knowledge seems deeply silly _per se_ and exactly
| the kind of thing you often see from people trying to push a
| "rebel" image for marketing reasons...)
|
| But yes the definitions of _several_ other terms seem slippery
| and to change from one use to the next, including knowledge.
| AnimalMuppet wrote:
| > (though his protest that in 1945 it was widely denied that
| there is any knowledge but scientific knowledge seems deeply
| silly per se and exactly the kind of thing you often see from
| people trying to push a "rebel" image for marketing
| reasons...
|
| Look up "logical positivism" as a philosophical system. It
| became _the_ dominant academic philosophy for a while
| (including around 1945). It asserted almost exactly that -
| that there was no knowledge apart from scientific knowledge
| (although I believe it did accept direct sensory input as
| knowledge, and also the operations of pure logic).
|
| It's difficult now to see the water that he was swimming in
| then.
| lurking15 wrote:
| I guess I see this as an attempt or yearning to discredit him,
| but following in the work that sprung from Hayek and friends,
| the motivation for his work is clearly curiosity and wonder
| about how does anything get done in the world without
| coordination, never mind the wondrously complex things that are
| created nowadays.
|
| His conclusion is that knowledge is dispersed, represented in
| prices that arise from markets which is simply understood as
| cooperation. Knowledge may frankly be expressed as whatever
| enables and motivates someone to offer something on the market.
| If that's too vague for your taste, too bad.
|
| The wonder is that uncoordinated, independent cooperation gives
| rise to such abundant and sophisticated products. Not only that
| it's in a system that expresses everyone's individual
| preferences and competing interests. Central planning fails
| spectacularly to do this, and there's no reason to believe that
| it ever will even with fantastic computational power.
| kaycebasques wrote:
| Definitely not trying to discredit him. I have no horse in
| that economic ideology race. I'm just honestly curious about
| what the heck we mean when we talk about knowledge. The
| background is that I'm a technical writer (TW), and a lot of
| us TWs are recognizing that knowledge management is becoming
| even more important than it already was before (and we
| already knew it was an important part of our role). So
| naturally as I begin this journey I am looking deeply into
| the meaning of the term and finding many different
| definitions. Your synthesis of this article for example gave
| me yet another new perspective on it.
| lurking15 wrote:
| Ah got it. I think the idea of knowledge management is
| maybe misguided when applied to economics.
|
| Knowledge in economic terms is much less definite because
| prices reflect subjective value.
| dleeftink wrote:
| Isn't it precisely what makes knowledge and its management
| interesting? Just as the diversity of PKM solutions it has
| given rise to?
|
| Its definition being difficult to pin down is a feature--not
| _a_ single knowledge, but a multitude of (in)compatible
| knowledges and messy knowledge-making processes, and the many
| different interests that arise from it.
| schuyler2d wrote:
| Thanks for linking to this -- it highlights a fallacy that Hayek
| seemed to mire in whereas on one hand, he believed that the
| aggregate "market" forces would always be sufficient to stabilize
| pricing stability (/inflation) he railed against the ability for
| _any_ 'manager' (i.e. the government) to do so.
|
| I'd strongly recommend to folks interested in this to pick up the
| Stiglitz, et al 2001 Nobel Prize on information asymmetries-
| research https://www.nobelprize.org/uploads/2018/06/advanced-
| economic...
| the_optimist wrote:
| Stigliz' enthusiasm for "correcting" markets never seemed to
| extend to reducing his hypothetical information asymmetries,
| but rather tipped toward intervention. This disposition plays
| well with bureaucracy with whom he enjoys the most fervent
| support. Meanwhile, the market sustains an unbounded global
| search to identify and remediate material information
| deficiencies. The examples he identifies form a limited caveat
| to the whole. Those who bring him to the front of the line
| consistently miss the economic forest for an ephemeral tree,
| and often do so to curry political favor.
| schuyler2d wrote:
| Stiglitz specifically wrote about minimal interventions of
| e.g. just supporting/hosting (reliable) information
| exchanges. His proof showed that there were some markets
| where there was no value for any individual player to "pay"
| for the information needed to improve a market, so it stayed
| bad. Stiglitz' career definitely moved in a direction of more
| interventionist policies (of which I'm probably more
| sympathetic than you to some/many of them).
|
| Are you suggesting that I'm trying to curry political favor
| with...Stiglitz (or someone else)?
| the_optimist wrote:
| My comment is broad-based and not directed at you
| specifically.
| BlandDuck wrote:
| Hayek makes no statement about the ability of market forces to
| stabilize prices.
|
| On the contrary, his point is that the equilibrium price in a
| decentralized market is a good sufficient statistic that
| aggregates the current demand and supply situation.
|
| Building on his example on page 525, if more screws of a
| particular size are suddenly in higher demand, then the price
| will increase, as it should!
|
| The goal is not to stabilize the price but to have the price
| reflect the marginal opportunity cost.
| schuyler2d wrote:
| Right, but for _functional_ markets it turns out the marginal
| opportunity cost is not good enough.
|
| Most famously interest rates without some government (or
| other, in the case of Crypto) hand in distribution and
| projected distribution, the market can fail (everyone is
| encouraged to hoard).
|
| In Stiglitz' case (not looking it up, but from memory), used
| car markets fail. While the marginal _net_ opportunity cost
| is what the price yields, it creates a negative feedback loop
| where people that have a used car that 's more valuable than
| is verifiable exit the market, and then you get .... all the
| more 'lemons' -- i.e. only bad cars). Dealerships are one way
| to correct for that information loss, but markets don't
| always value sufficiently the information that will solve it.
|
| We can be a bit more smug/hopeful nowadays, because
| information is a lot more easily aggregated/hosted. But we
| have to recognize the .... value of those components.
| Geee wrote:
| Hayek doesn't talk about price stability or inflation at all in
| this article. There's no fallacy here.
|
| This is basically the "prices are all we need" of economics.
| It's written in historical context when some still economists
| thought that a centrally planned economy could work. Hayek
| writes about the price system and how it enables an economy to
| function in a decentralized manner, and why it can't function
| without it. Hayek argues that it's essential that the decisions
| are made with local knowledge, because every individual
| possesses private and unique knowledge, which is not available
| to central planners.
|
| On the other hand, all the information which an individual
| needs from other individuals is transmitted through prices,
| i.e. everyone only needs to know how to make best use of the
| prices they see. Thus, there's no need for any kind of oracle
| or central entity which knows what's going on in the economy to
| make it function.
|
| This is still relevant of course, in the way that most people
| don't realize how magical the price system is, and how humans
| basically just stumbled upon it without anyone understanding
| it.
| schuyler2d wrote:
| Not in the article, but the body of work (that you're clearly
| familiar with).
|
| If you believe the Fed/ability-of-the-Fed to smooth the
| boom/bust cycle, then you disagree with Hayek -- he wasn't
| (just) arguing for a generally free market -- he believed
| that all markets were perfect (especially/including the price
| value of Money).
|
| It turned out Keynes was right.
| Geee wrote:
| Yeah, it's related in that way. Fed or other central banks
| setting / controlling interest rates is definitely price
| control (interest is the price of money), and it is a form
| of central planning, or central intervention which makes
| price signals less pure.
|
| I think it's "too soon" to say that Keynes was right.
| Afaik, Hayek predicted the Great Depression based on the
| Austrian business cycle theory. I think that ABCT is mostly
| right, but it's probably imperfect. There's so much going
| on in the real world that it's almost impossible to say
| whether a policy or a theory or whatever actually caused
| something or didn't cause, and what would have happened
| otherwise.
| ihm wrote:
| It's not remotely true that prices are capable of
| transmitting all the information required to reproduce
| society.
|
| This is for the simple reason that prices more or less only
| communicate information about the amount of labor required to
| produce a thing[0].
|
| Therefore prices on their own are, for example, incapable of
| transmitting information about what action needs to be taken
| to correct the relationship to the biosphere. Information
| about the state of the biosphere will only enter into prices
| to the extent that things start taking more labor to produce.
| But there's no market mechanism that would then cause that to
| direct action towards stabilizing the climate.
|
| [0]: This is because cost resolves into business owner's cut
| + labor cost + cost of inputs, and the inputs can recursively
| be split into the same until you're left with the amount
| owners take, the amount paid to workers, and the amount paid
| to owners of natural resources.
|
| The business owner's cut and the amount paid to owners of
| natural resources are socially determined and bear almost no
| relationship to the physical world or reproduction of
| society.
| svnt wrote:
| Is this an intuitive conclusion you've arrived at or do you
| have a source for it? It seems it can trivially be shown to
| be false under a number of circumstances: supply and
| demand, secondary markets, etc.
| knxnts wrote:
| nice to see this.
| kreyenborgi wrote:
| The Wikipedia article on this mentions that Wikipedia was partly
| inspired by it, which makes sense in that it very much values
| local, decentralized knowledge and dismisses the possibility of
| an all-seeing oracle (which even the sum of Wikipedia is not, cf
| edit wars).
|
| Compare and contrast the repost today of The Singularity - would
| Hayek believe that a computer (with the goal of being an Economy
| Maximizer) would even theoretically be able to have enough
| knowledge to implement economic equilibrium (and maintain that
| equilibrium over time)?
| DiscourseFan wrote:
| Another, earlier book that essentially takes the same premise but
| in a far grander fashion is Georg Simmel's _Philosophy of Money_
| , which takes money as the central organizing factor of
| contemporary society and examines everything from that
| standpoint. I would highly recommend it; though it's quite long,
| and if you don't have time to read it all you can start from the
| last chapter.
| Animats wrote:
| That''s a very classic view, from an era when market-based
| systems vs. central planning were a big issue. They missed so
| much.
|
| - Just because there are restoring forces doesn't mean stability
| is reached. This is basic control theory, but it escaped
| economists for a long time. There's always nonzero lag. Often
| there's a lot of lag. This can move things out of the stable
| region.
|
| - There's an assumption here that a market economy is a
| _competitive_ market economy. This breaks down when the number of
| major players in a market is small. Or somebody has a "moat".
| Read Thiel's "Zero to One".
|
| - Hayek was writing in an era when manufacturing dominated,
| production cost exceeded marketing cost, and the size of
| companies was limited by inefficiencies in coordinating a really
| large organization. Those constraints favor a market economy.
| Today, services dominate, marketing often costs more than
| production (which means most of the cost is advertising), and
| computing has made it possible to scale companies to planetary
| scale without organizational collapse. Those factors favor sheer
| scale.
| Terr_ wrote:
| > There's an assumption here that a market economy is a
| competitive market economy.
|
| Aside, there's also a fundamental trade-off been a competitive
| market and a market where individual actors have freedom.
|
| For example, one model may assume that everyone has perfect
| price information and therefore the market is very efficient,
| while another assumes that everyone can make secret deals and
| keep prices hidden and therefore cartels are unstable.
| dh77l wrote:
| Well Collapse almost happened in 2008. Useful exercise is to
| play out what would have happened if the banks werent bailed
| out.
|
| And again just last year everyone got fully bailed out when SVB
| collapsed.
|
| This type of stuff encourages all kinds of halucinations.
| DiscourseFan wrote:
| >computing has made it possible to scale companies to planetary
| scale without organizational collapse
|
| I wonder. Say we had various factories for producing goods
| around the world, and different factories requested the same
| inputs in different amounts. An algorithm could probably
| calculate how much of each input it should distribute to those
| factories. However, the structure of this economy still relies
| on the commodity form, since those inputs would almost
| certainly be worked in a certain, standardized way to be
| properly organized by the algorithm properly. Therefore, the
| computerization of the economy only leads to an image of the
| kind of unrestrained productivity you might imagine technology
| would bring, but lacks the kind of creativity necessary for it.
|
| This is all to say that if not the market, then whatever else
| could've managed an incomprehensibly complex economy certainly
| existed before contemporary computers (and certainly, the
| structure of the economy in even the 19th century in early high
| capitalism itself was the "computer," the quantitative
| management of social forces). Its not as if our era, today, is
| particularly unique, or that Hayek was right then or wrong now,
| but rather that he was _fundamentally_ wrong to believe that
| the market itself was the path to freedom, even then.
| temporallobe wrote:
| I read the first few paragraphs and will set it aside for later,
| but it has always been fascinating to me how writing styles and
| English language usage varies over the years. I could immediately
| tell this was an "older" publication based on phrasing and word
| order, but it still flows nicely and conveys information
| elegantly (which we somewhat lack in modern writing). Go back 100
| years and it's even more pronounced but still very similar to
| modern English, 200 years and it's still quite familiar, but 300
| years you're getting dangerously close to King James/Shakespeare,
| 400 years it's almost a different language, etc. I sometimes like
| to back as far as I can until something becomes completely
| unintelligible.
| bwanab wrote:
| Hayek wasn't a native English speaker so that could have
| something to do with the style.
___________________________________________________________________
(page generated 2024-10-29 23:02 UTC)