Adm. Mullen’s Spinning vs. Prof. Hayek’s Insight by David R. Henderson -- Antiwar.com

Adm. Mullen’s Spinning vs. Prof. Hayek’s Insight by David R. Henderson -- Antiwar.com: "In 1945, the flagship journal of the American Economic Review published one of the ten most important economics articles of the 20th century. Entitled “The Use of Knowledge in Society,” it was written by an Austrian economist named Friedrich Hayek. I deal with this article in every economics course I teach. (For the notes on this article that I share with my students, see this.) The article is explicitly about why central economic planning doesn’t work and why free markets do work. This article put the final intellectual nail in socialism’s coffin. Hayek’s insight was that the most important information that a completely well-intentioned central planner would need to plan an economy is information that the planner can’t have. Instead, this information exists in millions of individuals’ minds and is information that only they can have because of their particular circumstances. Economists who write in the Hayekian tradition call this knowledge of local circumstances “local knowledge.”"