Technology’s heightening of society’s complexity outstrips its heightening of the social planner’s informational capabilities. Hayek, like [Adam] Smith, drew a lesson for policy: Except in the most clear-cut cases of systemic harm, like air pollution, the supposition that government officials can figure out how to improve the results of decentralized (i.e., voluntary) decision making becomes more and more outlandish. In his Nobel lecture, Hayek called that supposition the pretense of knowledge. As intellectuals who ponder the complex workings of the social world, we really know little aside from one hardy fact: If those who participate in an activity do so voluntarily, each is probably bettering his or her own condition. The more complex the system is, the more skeptical we ought to be about claims to knowledge that go beyond and against that hardy fact.
Fred Foldvary and Daniel Klein, The Half-Life of Policy Rationales, 2003.
November 5, 2018
QotD: Technological advance and the Knowledge Problem
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