Forms of knowledge

The dichotomy that Hayek operates between the natural sciences and the social domain also leaves its imprint on his categorisation of forms of knowledge. In his view, there are but two such forms: knowledge of general scientific laws, and (subjective) knowledge of `particular circumstances of time and place'. But this leaves out of account a whole layer of knowledge that is crucial for economics, namely knowledge of specific technologies. Such knowledge is not reducible to general scientific law (it is generally a non-trivial problem to move from a relevant scientific theory to a workable industrial innovation), but neither is it so time- or place-specific that it is non-communicable. The licensing and transfer of technologies in a capitalist context shows this quite clearly. A central registry of available technologies would form as essential component of an efficient planning system. How would such information be assembled? Again, Hayek's notion of knowledge existing solely `in the mind' is an obstacle to understanding. It is increasingly common---indeed, it is by now all but universal practice---3 for firms to keep records of their inputs and outputs in the form of some sort of computer spreadsheet. These computer files form an image of the firm's input--output characteristics, an image which is readily transferable.3

Further, even the sort of `particular' knowledge which Hayek thought too localised to be susceptible to centralisation is now routinely centralised. Take his example of the information possessed by shippers. In the 1970s American Airlines achieved the position of the world's largest airline, to a great extent on the strength of their development of the SABRE system of computerised booking of flights (Gibbs, 1994). Since then we have come to take it for granted that our local travel agent will be able to tap into a computer network to determine where and when there are flights available from just about any A to any B across the world. Hayek's appeal to localised knowledge in this sort of context may have been appropriate at the time of writing, but it is now clearly outdated.

We would not dispute, however, that some localised knowledge, important for the fine-grained efficiency of the system, may be too specific for any meaningful centralisation. Our objection here is that Hayek seems to overlook the possibility that this sort of knowledge may simply be <#275#>used<#275#> locally, without prejudice to the operation of a central plan. The question here concerns the degree of recursiveness of planning, that is, the extent to which plans can be formulated in general terms by the higher planning authorities, to be specified in progressively fuller detail by successively lower or more local instances. Nove (1977, 1983) has argued persuasively that as regards the composition of output, the degree of recursiveness of planning is rather small. If a central authority sets output targets in aggregated terms, and leaves it to lower instances to specify the details, the result is bound to be incoherent. In the absence of the sort of horizontal links between enterprises characteristic of the market system, the enterprises simply cannot know what specific sort of output will be needed, unless they are told this by the planning authority. This may be granted.4 But low recursiveness with respect to decisions on the composition of output does not imply that all decisions relating to production have to be taken centrally. Consider the knowledge, at the level of the enterprise, of which particular workers are best at which tasks, who is the fastest worker and who the most reliable and so on (and similarly for the particular machines operated within the enterprise). Why shouldn't such knowledge just be used locally in drawing up the enterprise's own detailed schedules for meeting an output plan given from the `centre'? Isn't this precisely what happens at plant level in the context of planning by a large (multiplant) capitalist enterprise?