The Use of Knowledge in Society is an article written by Friedrich A. Hayek. In the article, Friedrich talks about the construction of rational economic order. He states the problem which the structure tries to solve, to be; possession of relevant information, if we can start from a given system of preferences, and commanding complete knowledge of available means. The article portrays planning as one of the main problems of economic policy and designing an efficient economic system.
Planning is portrayed to depend on knowledge at most of its process. Therefore, communication of this knowledge to the planners is a major challenge for the economic process. The article also portrays who does the planning as another challenge to be addressed, that is, whether the plan will be done centrally or will be divided among individuals. Freidrich also portrays the importance of different kinds of knowledge in the construction of an economic system. Therefore, experts with this relevant experience that is needed are advantageous compared to others, and thus, considerations are mostly towards them.
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The article suggests that technological knowledge, and modern production apparatus, has led to changes and daily adjustments becoming less relevant in economic considerations. Therefore, there is minimal importance of the knowledge of the particular circumstances of time and place. The author suggests the need for decentralization to solve the economic problem of society, this is because through decentralization we can ensure the use of the knowledge of the particular circumstances of time and place promptly. Furthermore, the article portrays the economic calculus as a means of showing how to solve the problem, through analogy. For communication of information in an economic system, the article suggests the use of a price system as a mechanism. This price system operates at an economy of knowledge and also the individual participants will require little information to make them take right actions.
