The point at issue between Hayek and the proponents of socialist economic planning is not ``whether planning is to be done or not''. Rather it is ``whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals'' (Hayek, 1945, pp. 520--21). The latter case is nothing other than market competition, which ``means decentralized planning by many separate persons'' (Hayek, 1945, p. 521). And the relative efficiency of the two alternatives hinges on
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whether we are more likely to succeed in putting at the disposal of a single central authority all the knowledge which ought to be used but which is initially dispersed<#86#>#tex2html_wrap_inline97# or in conveying to individuals such additional knowledge as they need in order to fit their plans in with those of others. (<#52#>ibid<#52#>.)
The next step in Hayek's argument involves distinguishing two different kinds of knowledge: scientific knowledge (understood as knowledge of general laws) versus ``unorganized knowledge'' or ``knowledge of the particular circumstances of time and place''. The former, he says, may be susceptible of centralization via a ``body of suitably chosen experts'' (Hayek, 1945, p. 521) but the latter is a different matter.
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[P]ractically every individual has some advantage over others in that he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation. (Hayek, 1945, pp. 521--22)<#87#>
Hayek is thinking here of ``knowledge of people, of local conditions, and special circumstances'' (Hayek, 1945, p. 522), e.g., of the fact that a certain machine is not fully employed, or of a skill that could be better utilized. He also cites the sort of specific, localised knowledge relied upon by shippers and arbitrageurs. He claims that this sort of knowledge is often seriously undervalued by those who consider general scientific knowledge as paradigmatic.