Knowledge and Power: Hayek’s Dual Problems with Planning

23 Pages Posted: 15 Dec 2018 Last revised: 11 Apr 2019

See all articles by Byron Carson

Byron Carson

Hampden-Sydney College - Economics and Business Department

Christopher J. Coyne

George Mason University - Department of Economics

Date Written: December 15, 2018

Abstract

This paper explores the connection between Hayek’s dual problems of planning. Following Hayek we begin from the premise that the knowledge problem is ubiquitous. As Hayek argued, markets are effective at resolving the knowledge problem. However, where markets are absent, the knowledge problem requires a search for alternative mechanisms to determine the allocation of scarce resource. Political planning is one such coordination mechanism. Reliance on political planning, however, inevitably leads to the power problem as significant discretionary power is granted to those tasked with planning. If one was to read only Hayek’s work on the knowledge problem, or only his popular writings, such as The Road to Serfdom, they might miss the important connection between these dual problems.

Keywords: F.A. Hayek, knowledge problem, power problem

Suggested Citation

Carson, Byron and Coyne, Christopher J., Knowledge and Power: Hayek’s Dual Problems with Planning (December 15, 2018). GMU Working Paper in Economics No. 19-12. Available at SSRN: https://ssrn.com/abstract=3301967 or http://dx.doi.org/10.2139/ssrn.3301967

Byron Carson

Hampden-Sydney College - Economics and Business Department ( email )

Hampden-Sydney, VA 23943
United States

Christopher J. Coyne (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

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