HAYEKWEB: V Postrel on Hayek & 'Information'

[Robert Hettinga <rah@shipwright.com>]

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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.

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