The Use of Knowledge in Society
· The American Economic Review lists an issue month but no publication day; 15 September is used as a neutral sorting date.
Summary
Hayek argues that economically relevant knowledge is dispersed across people and often tied to particular times and places. Prices help coordinate their decisions by communicating changes in relative scarcity without requiring any one planner to collect all the underlying information.
Why it matters
The argument is central to claims that better models or larger platforms could improve economic planning. AI may sharpen forecasts and process more information, but coordination still depends on eliciting local knowledge, aligning incentives, and adapting to changes that are not already in a central dataset.
What to keep in mind
This is an argument about economic coordination, not an empirical test of AI planning. It does not show that decentralized markets always outperform firms or public institutions, nor that tacit and local knowledge can never be represented or learned by machines.