--- begin forwarded text Date: Sun, 14 Dec 1997 03:59:29 EST Reply-To: Hayek Related Research <HAYEK-L@MAELSTROM.STJOHNS.EDU> Sender: Hayek Related Research <HAYEK-L@MAELSTROM.STJOHNS.EDU> From: GBRansom <GBRansom@AOL.COM> Organization: AOL (http://www.aol.com) Subject: HAYEKWEB: V Postrel on Hayek & 'Information' To: HAYEK-L@MAELSTROM.STJOHNS.EDU
Hayek on the Web <<
"Knowledge at a Cost" by Virginia I. Postrel, editor of _Reason_ magazine, on the Web at: http://www.reasonmag.com/opeds/vpasap0695.html
From "Knowledge at a Cost":
".. The "information is free" school of thought also tends to assume that information magically appears in computer networks. But deciding what to record and how means negotiating among people with different needs and knowledge bases. The marketing department of a steel company, for instance, wants products classified by how they're used, while manufacturing wants them classified by how they're made. A health insurer studied by Elihu Gerson and Susan Leigh Star of the Tremont Research Institute had a five-person unit devoted to resolving conflicts over how to code medical procedures. Doctors, customers, and various internal departments disagreed about what criteria should determine the codes and how narrow the categories should be. Yet everyone had to use the same system. The unit's job was essentially diplomacy: getting the different groups to agree on coding guidelines. "Traditionally, finding solutions to information systems problems has been framed as...arriving at the 'correct answer' via algorithmic procedures," write Gerson and Star. But in this case, there is no single correct answer. "Rather, there are multiple, possibly inconsistent, competing answers, none of which has a unique claim to validity." Nobel laureate F.A. Hayek, one of the earliest economic theorists of the role of knowledge, would have recognized the problem. Organizations overcome such difficulties through compromise and negotiation, or they break down. But society as a whole can avoid the "knowledge problem" only at the cost of stamping out individuality. In his classic 1945 essay, "The Use of Knowledge in Society," Hayek criticized economists who believed central planning would be simple. He wrote that "the knowledge...we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess." Those "bits" include not merely facts, but complex individual goals and preferences information that, by its very nature, can't be centralized. In our enthusiasm for the power of information technology, we would be foolish to forget its limitations. Information may be cheap, but knowledge still isn't free." A slightly shorter version of Postrel's article originally appeared in the June 5, 1995 issue of _Forbes ASAP_. Hayek on the Web is a regular feature of the Hayek-L list. --- end forwarded text ----------------- Robert Hettinga (rah@shipwright.com), Philodox e$, 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' The e$ Home Page: http://www.shipwright.com/ Ask me about FC98 in Anguilla!: <http://www.fc98.ai/>